A Report to the Operations Evaluation Department Asian Development Bank For the Country Assistance Program Evaluation for

Pakistan

Evaluation of the Agriculture and Natural Resources Management Sector

by Raymond Greer Syed A. Husaini Jagirdar

July 2006

CURRENCY EQUIVALENTS Currency Unit Pakistan rupee/s (PRe/PRs) At Appraisal (date) $ PRs At Project Completion (date) $ PRs At Operations Evaluation (date) $ PRs

PRe1.00 $1.00

= =

Note: The exchange rate of the Pakistan rupee is determined under a system of a managed float.

ABBREVIATIONS ADB ADF ANR CSP EIRR GDP ha IPM IA IP OFWM JBIC MINFAL MTDF NDP NGO OCR O&M OED PIDA PCR PPAR RDP RDF PRM SAPE TA WAPDA Asian Development Bank Asian Development Fund agriculture and natural resources country strategy and program economic internal rate of return gross domestic product hectare integrated pest management Implementing Agency Inspection Panel on farm water management Japan Bank for International Cooperation Ministry of Fisheries, Agriculture and Livestock Medium Term Development Framework National Drainage Program nongovernment organization ordinary capital resources operation and maintenance Operations Evaluation Department Provincial Irrigation and Drainage Authority project completion report project performance audit report rural area development project rural development fund Pakistan Resident Mission sector assistance program evaluation technical assistance Water and Power Development Authority

NOTE In this report, $ refers to US dollars.

CONTENTS EXECUTIVE SUMMARY I. INTRODUCTION A. B. C. II. Scope and Objectives of the Evaluation Evaluation Methodology Report Content iii 1 1 1 2 2 2 3 5 6 7 11 14 15 15 17 19 21 21 24 28 29 29 30 37 51 61 64 74 74 78 80 80 81

BACKGROUND A. B. C. D. E. F. G. Introduction Land and Land Ownership Agriculture and Related Public Sector Institutions Legal and Regulatory Framework Growth and Productivity Trends Water Resources Issues

III.

STRATEGIES AND POLICIES A. B. C. Government Strategies and Policies ADBs Country Strategies for the Sector Assessment of ANR Strategies in Country Strategies

IV.

DESCRIPTION OF ADBS OPERATIONS A. B. C. Public Sector Loans Technical Assistance and Other Non-Lending Activities The Influence of Strategy in Program Decisions

V.

ANALYSIS OF PERFORMANCE OF ADBS OPERATIONS A. B. C. D. E. F. Corporate Sector Performance Rating Rural Development Subsector Performance Assessment Water Resources/Infrastructure Performance Assessment Other Agriculture and Natural Resources Projects Policy and Program Support Overall Program Assessment

VI.

CONCLUSIONS AND RECOMMENDATIONS A. B. C. D. E. Conclusions and Lessons Identified Corruption in Pakistan Gender Effectiveness of Project Preparatory Technical Assistance Recommendations

ii APPENDIXES 1. 2. 3. Framework for Strategy Quality Assessment Agriculture and Natural Resources Sector Strategies in ADB Country Strategies List of Loans and Technical Assistance, 19852005 86 91 95

This report is a working paper for the Country Assistance Program Evaluation for Pakistan. OED Working Papers are an informal series to present the findings of work in progress in evaluation. They are circulated to encourage discussion and elicit comment. The views expressed in this report are those of the author(s) and do not necessarily reflect the views and policies of the Asian Development Bank, or its Board of Governors or the governments they represent. The Asian Development Bank does not guarantee the accuracy of the data included in this report and accepts no responsibility for any consequences of their use. Use of the term country does not imply any judgment by the author(s) or the Asian Development Bank as to the legal or other status of any territorial entity.

EXECUTIVE SUMMARY This report, prepared for the Operations Evaluation Department (OED) of the Asian Development Bank (ADB), presents the findings of an evaluation of ADBs operations in the agriculture and natural resources (ANR) sector in Pakistan for 19852005. The evaluation aims to provide an independent assessment of ADBs assistance to the sector, its impact on the sectors development, and on a wider scale, its impact on the countrys economic development and poverty alleviation program. It also seeks to identify lessons and areas where the Government, ADB, private sector, and other stakeholders and funding agencies can work together more effectively to promote the development of the sector and achieve the overarching goal of poverty reduction. This work will contribute to the Pakistan Country Assistance Program Evaluation, which will in due course support the formulation of a new Pakistan Country Strategy and Program (CSP) to be approved in 2006. ADBs operations over the last 20 years (19852005) have been evaluated. For this purpose, the ANR sector has been divided into three categories: (i) rural development, (ii) water resources, and (iii) other, which includes agribusiness, forestry, conservation, livestock, and other activities. During this period, ADB has funded 43 loan projects with a total value of $2.723 billion and 77 technical assistance (TAs) valued at $52 million. Historically, agriculture has absorbed around 30% of ADBs assistance to Pakistan, but in the last decade this has reduced as assistance to other sectors has increased, especially the social sectors. ADBs strategies for development in Pakistan, as stated in ADBs various operational strategy documents produced roughly every 5 years, were aligned with the Governments strategies in their five-year development plans. However, the frequent changes of government administration over the period, and a lack of resources to achieve the planned outcomes meant that the achievement has been less than envisaged in the targets. ADBs support to the sector has focused on supporting modernization, development of a market-led economy, and transition to farmer management of irrigation. Generally speaking, the pace of change envisaged has not been matched by Governments speed, although good progress has been made. The effectiveness of ADBs plans for the ANR sector as derived from the strategy plans was assessed against a set of 20 criteria using OEDs methodology. As shown in the table below, the ranking was low to moderate. It is evident that there has not been a lot of depth to the analysis and evaluation underpinning the program. Strategy has not been a powerful determinant of the formulation of the program, which has been more influenced by past actions and governments future policy and funding plans. Rating Moderate

Criteria Analytical Rigor Balance Continuity Credibility Critical Mass Demonstrated Learning Efficiency Flexibility Impact/Results Innovation Needs-Based

Low

High

iv Rating Moderate

Criteria Partnerships Playing to ADBs Strengths Political Awareness Responsive to Emerging Opportunities Results management Selectivity/Focus Sustainability Synergy Value-for-Money

Low

High

Overall, the performance of ADBs operations in the ANR sector is rated as successful but bordering on partly successful. According to the evaluation of past and present projects, 51% are successful, 44% partly successful, and 5% unsuccessful. The performance of each of the three categories used by this evaluation was assessed based on performance ratings for project completion reports (PCRs) and project performance audit reports (PPARs) that were available and the evaluation teams own evaluations. For the rural development group of projects, the majority were rated as partly successful. The main constraints were inefficient implementation caused by delays in startup, a lack of long term sustainability of the infrastructure and institutions developed, and lower economic performance. For the water resources group of projects, the conclusion is that overall performance has been successful, but there are serious issues concerning the commitment to the reform process and transition to farmer management of irrigation and drainage that will impact on sustainability and the durability of irrigation and drainage systems in the future. The other group of projects had a mixed performance, with projects for livestock and rural credit being rated as unsuccessful, while others were evaluated as having been successful or partly successful. Support for to this group by ADB has not been as consistent or coherent as for the other two categories (rural development and water resources). There has been a lack of continuity in maintaining support to the various subsectors on an ongoing basis. For all subsectors there is a need for greater integration between stakeholders to develop synergy and more sectoral analysis to underpin the rationale between strategies. The ANR sector is the productive sector of the economy and deserves ADBs continuing support. Future funding and support should follow a roadmap developed from a coordinated strategic analysis and assistance plan closely linked to reforms and focused on subsectors where there is a commitment to the reform process, especially in the water resources and irrigation subsector. Overall the recommendations to ADB are: (i) (ii) Focus on fewer subsectors/areas and maintain a consistent commitment to provide support and policy dialogue over a longer planning horizon (i.e., 10 years), subject to performance reviews and Government requirements. Projects should be modeled on provincially-based projects and recognize that future projects have to accommodate the devolution of responsibility and direct funding to the local governments, rather than top-down centrally funded federal projects.

v (iii) Maintain flexibility in the CSP to allow for changes due to unpredictable events in an uncertain future, and the uncertain level of ADF funding that may be available through the use of new facilities, such as the multi-tranche financing facility, public-private sector partnership, and serial funding. Policy reform should be dealt with separately from project funding and be part of a long-term sector road map and practical sequence of reforms, capacity strengthening and investment programs. International evidence has shown the ineffectiveness of conditionality. Project conditionalities should only be imposed when the importance of policy change and reform is absolutely necessary for the project to achieve its planned outcome and where Government is committed to implement the reforms. In that event loan conditions should be identified early in the project formulation and preparation process and recognized as a necessary step in the procedures during project preparation. Project complexity in relation to executing and implementing agency capability, particularly at the local government level, needs to be rigorously taken into account with greater use of the cluster loan or new multi-tranche financing facility such that projects can be broken down into more manageable pieces. Government frequently lacks ownership of ADB projects. The project preparatory TA facility, whereby the Government (and ADB) can largely disengage from project design and delegate this responsibility to consultants, is becoming dysfunctional. More and more project preparatory TA time is being taken up with crosscutting issues (often of little interest to the Government) with insufficient attention to basic sector and problem analysis, consideration of alternatives, and consultation (particularly at lower levels of government and with the community). Given this, other ways of using project preparatory TA funds need to found such that the Government drives the preparation process. ADB needs to find a better balance between the number of projects and subsectors of engagement and the number and skill areas of the human resources it has available for supervision and monitoring. Given constraints on the budget and staffing, this also implies operating across fewer subsectors (see [i] above). As a general rule, ADB should not operate in a subsector unless it has a qualified national officer and/or international staff member in the Pakistan Resident Mission. Policy dialogue is an essential part of ADBs program. The need for, and nature of policy dialogue needs to be much better planned for and documented. Staff with the right experience and skills must be available to engage the Government in policy dialogue on an ongoing basis. The primary responsibility for this should rest with staff in the Pakistan Resident Mission. Effective policy dialogue can only be carried out on the basis of good sector analysis and policy analytical capability. ADB has significantly reduced the number of ANR sector experts among staff or assigned them to other duties. Consequently, and also because scarce resources for economic, sector, and thematic work are directed more to crosscutting issues, ADBs ability to engage in policy dialogue has been degraded. ADB needs to ensure that it has access to good quality and up-to-date analytical work at all times for those subsectors where it is active. ADB should ensure that Government meets its full responsibility for monitoring project outputs and outcomes as part of standardized monitoring and evaluation (M&E) function (an obligation that rests with ADB according to the inspection report of the Chashma Right Bank Irrigation Project).

(iv)

(v)

(vi)

(vii)

(viii)

(ix)

(x)

vi (xi) Provide assistance for project start-up through a project preparation facility and TA to assist implementing agencies prepare for project implementation.

Recommendations to the Government are: (i) In collaboration with ADB, conduct a review of rural development projects to consolidate the body of knowledge and investigate alternative models that are compatible with devolution of responsibility to local level government (LLG), working with LLGs, responsive to local needs, and effective in achieving outcomes. Government rarely carries out project monitoring and evaluation as envisaged in loan agreements. Given this, it is recommended that the Government and ADB review this whole area to find a way to meet ADBs needs and provide useful (and used) information to the Government. This is likely to involve moving from project-based monitoring and evaluation to greater use (and strengthening) of government systems. A lack of funds for the operation and maintenance (O&M) of infrastructure funded under ADB loans is a longstanding problem contributing to a lack of sustainability and reduced benefits. Ensure more recognition and funding is given to O&M requirements of projects, and make provision for sufficient funding to ensure sustainability of the facilities and infrastructure created, through alternative funding mechanisms, such as public-private sector partnerships, using loan funds for setting up trust accounts to provide funds for O&M, the imposition of user charges through pay for services (tolls), imposition of local taxes, and other appropriate methods, if feasible. Ensure better integration between line agencies for cooperation and synergy during project implementation, through provincial-level funded projects and more support for project coordination between stakeholders in project design. Delays in project startup and appointment of project staff contribute to poor performance. Alternative project implementation methods need to be explored and evaluated to strengthen project implementation. Alternatives include the use of special TA, or project preparatory TA to carry over to project startup, the appointment of dedicated project support staff, and contracted out project management services with payment based on project implementation milestones.

(ii)

(iii)

(iv)

(v)

I. A.

INTRODUCTION

Scope and Objectives of the Evaluation

1. This report, prepared for the Operations Evaluation Department (OED) of the Asian Development Bank (ADB), presents the findings of an evaluation of ADBs operations in the agriculture and natural resources (ANR) sector in Pakistan for the 20-year period, 19852005. The evaluation aims to provide an independent assessment of ADBs assistance to the sector, its impact on sector development, and on a wider scale, its impact on the countrys economic development and poverty alleviation program. It also seeks to identify lessons and areas where the Government, ADB, private sector, and other stakeholders and funding agencies can work together more effectively to promote the development of the sector and achievement of the overarching goal of poverty reduction. The report findings will contribute to the Pakistan Country Assistance Program Evaluation, which will in due course support the formulation of a new Pakistan Country Strategy and Program (CSP) to be approved in 2006. 2. The starting point for the evaluation, 1985, saw the publication of ADBs first Pakistan country strategy. For the purpose of the evaluation, operations are defined as (i) loans, (ii) technical assistance (TA), (iii) economic, sector, and thematic work (ESTW),1 (iv) policy dialogue, and (v) project administration support, using ADB resources. To assist with reporting and analysis, operations have been grouped as follows: (i) rural development, (ii) water resources, and (iii) other, the latter including agribusiness, forestry, conservation, livestock, and other activities. B. Evaluation Methodology

3. The methodology adopted follows that used for the 2005 sector assistance program evaluation (SAPE) for Pakistan, and other recent evaluation studies. Information has been drawn from two sources: (i) interviews and field visits, and (ii) document reviews. Interviews were held with officials and stakeholders in Pakistan at federal, provincial, and district level. Visits were made to North-West Frontier Province (NWFP), Punjab, and Sindh provinces to meet provincial officials, to observe project activities in the field, and to discuss outputs and impact with project staff, consultants and beneficiaries. Meetings were held with development partners including the World Bank, Japan International Cooperation Agency, ODA/JICA, Department for International Development (DFID), SIDA, The Royal Netherlands Embassy (RNE), and European Union Delegation. Documents reviewed included ADB CSPs, TA papers, project preparation reports, reports and recommendations of the President (RRPs), project completion reports (PCRs), TA completion reports, project performance audit reports (PPARs), back-to-office reports, and various government reports and studies relevant to the sector. 4. Time did not permit a detailed ex-post analysis of all ADB operations. Indeed, that was not the intention. Accordingly, the report has drawn heavily on previous evaluation reports, especially PPARs. Conclusions and recommendations from reports are quoted and repeated in this report where in the opinion of the evaluation team they are still pertinent in the present economic and political situation. Some projects, selected to provide a representative crosssection of ADB operations, have been investigated in detail. For on-going projects that have not yet been post-evaluated by ADB, an assessment of performance has been made using standard PPAR evaluation criteria.
1

ESTW is the term ADB uses to describe economic and sector studies and those covering the crosscutting or thematic areas of importance such as gender, governance, private sector development, environment, and so on.

2 C. Report Content

5. This report comprises six chapters, plus appendixes. Chapter I is an introduction to the evaluation: its scope, objectives, and methodology. Chapter II provides a summary of the performance of the sector. Chapter III presents a summary of the development strategies and policies pursued by ADB and the Government during the evaluation period, while Chapter IV provides details of ADBs operations and assesses the influence of strategy in program decision making. Chapter V presents an analysis of the performance of ADBs operations. Conclusions and recommendations are presented in Chapter VI. Supporting material is included in the appendixes. II. A. Introduction BACKGROUND

6. Although Pakistans economy is undergoing modernization and diversification, the ANR sector still has an important role in providing employment and livelihood to the bulk of the population and providing the majority of exports. Climatically, Pakistan is predominantly a semiarid country, with nine agroclimatic zones recognized. These allow wide diversity both in species grown and in maturity dates. 7. The agriculture sectors share of total gross domestic project (GDP) was about 60% when the Pakistan was created in 1947, which fell to 53% by 1950, and in the following decades to about 45% in 1960, 38% in 1970, 29% in 1980, and from 1990 onwards stabilized around 23%. This has steadily decreased subsequently to the current level of 23% of GDP2 as over time, the contribution of the industrial and service sectors has grown in importance. Figure 1 shows the sectoral shares for recent years.3 Figure 1: Sectoral Shares of GDP 19992005

60 50
Percent

40 30 20 10 0 Agriculture Industries Services 1999/00 26.2 22.6 51.2 2000/01 25.1 23 51.8 2001/02 24.4 22.9 52.7 2002/03 24.2 22.9 52.9 2003/04 23.3 24.1 52.6 2004/05 23.1 24.5 52.4

GDP = gross domestic product. Source: Pakistan economic surveys.

2 3

Economic Surveys. Different years. Economic Advisors Wing, Ministry of Finance, Government of Pakistan. Pakistan Economic Survey 20042005; Economic Advisors Wing, Ministry of Finance, Government of Pakistan. Islamabad June 2005. Available: <www.finance.gov.pk>.

3 8. Despite its declining share, agriculture provides the main livelihood for the rural populace, which makes up around 66% of the countrys estimated population of 152.5 million in 2004/05 (footnote 3) and provides employment to about 43% of the work force.4 In addition to the main food commodities,5 agriculture also provides raw material to agroindustries and contributes 6070% of exportsmostly cotton products, rice, vegetables, and fruits. The performance of the agriculture sector therefore has a direct bearing on general economic welfare and the incidence of poverty for the rural population. An enhancement of agricultural growth will not only increase farm household income,6 but will also foster non-farm activities in the rural areas, through backward and forward linkages, thereby reducing rural poverty, income disparity, and the income gap between urban and rural areas.7 B. Land and Land Ownership

9. Pakistans land area is 59.4 million hectares (ha), of which about 24.2 million ha (41%) is not available for cultivation, leaving about 35.2 million ha (59%) of arable land suitable for agriculture. Of the cultivatable land, the actual cultivated area8 is about 22.1 million ha (63%), a little over 4.0 million ha (11%) is under forest, while about 9.1 million ha (26%) is unutilized, largely due to limited water availability, waterlogging, or salinity problems. Around 2.5 million ha (about 10%) is severely affected by waterlogging and salinity (water table is within 152 centimeters [cm] of the surface), while another about 2.5 million ha or 10% of the area is moderately affected, (water table is within 305 cm).9 However, since 2000, the area that is waterlogged has fallen by about 50%, due to an increase in the number of tubewells and drought affected water availability. 10. As further expansion of the cultivated area is unlikely, the per capita availability of cultivated land that was about 0.16 ha in 1999/2000 is predicted to decrease to about 0.12 ha per capita in another 10 years, if the present population growth rate continues. The agriculture sector is faced with challenges of increased pressure on limited land and water resources due to high population growth and vagaries of the weather, including droughts and floods. 11. There are about 6.3 million farm owners in the country with an average farm size of 3.23 ha. However, land distribution is heavily skewed, especially in Sindh province. About 87% of farmers have small farms of less than 5 ha, owning 39% of the farm land; 8% of farmers are in the medium size category (5 to 10 ha) owning 16%; while the 5% of farmers with more than 10 ha own 45% of the total area (Figure 2).10

Statistics Division. October 2004. Pakistan Labor Force Survey: 2003/04, Table 11. Islamabad: Federal Bureau of Statistics. 5 Food commodities include cereals (wheat, rice, maize, etc.), pulses, sugarcane and beetroot, oilseeds, vegetables, and fruits, meat and dairy products, fish and poultry, etc. 6 Ravillion, M. 2002. Externalities in Rural Development. Evidence for China. World Bank Policy Research Working Paper No. 2879. Washington, DC: World Bank. 7 Bolt, Richard. 2004. Accelerating Agriculture and Rural Development for Inclusive Growth: Policy Implications for Developing Asia. ERD Policy Brief No.29. ADB: Manila. 8 Cultivated area includes area under cultivation and current fallow. 9 Based on observations in October post-monsoon. 10 Statistics Division. 2000. Pakistan Agriculture Census 2000. Islamabad: Agriculture Census Organization.

4 Figure 2: Structure of Land Ownership (Percent farms and percent corresponding area)

100 90 80 70 Percent 60 50 40 30 20 10 0 Percent Farms Percent Area Less than 5 ha 87 39 Between 5 and 10 ha 8 16 More than 10 ha 5 45

ha = hectare. Source: Pakistan Agricultural Census 2000.

12. Similarly, there are about 6.6 million operational farm holdings. About 78% of these holdings are cultivated by owner cultivators farming about 73% of the area, 14% of farms are operated by sharecroppers on about 12% of the area, while about 8% of farms are operated by owner-cum-sharecroppers on about 15% of the farm area (footnote 10). 13. In 1981, about 72% of the population resided in the rural areas and by 2004 this had decreased to 67%. This suggests a gradual permanent migration to the urban areas over and above seasonal or circular migration to urban areas and overseas for temporary employment. The main push factor for urban migration is considered to be the lack of non-agricultural investment in rural areas to absorb surplus labor. However, the flow of remittance income to the rural areas has increased over time and various studies have indicated that the share of agricultural income in the total household budget has decreased over the last decade. 14. The antiquated land record and documentation system is a constraint as in Pakistan there is no central register of land title. Land revenue records are not records of title, but records of who is liable to pay tax. Therefore, these records only have persuasive, not conclusive, evidentiary value. Furthermore, oral land transactions (specifically, oral gifts) are still allowed. The net result is total confusion regarding title to land, which normally takes several decades to sort out if litigated. There are major and substantial economic costs to lack of title security; no bank will lend more than 50% of value of a property because of potential litigation in recovering the loan. An additional hazard in case of rural land is that of historical pre-emption laws, which no longer have a reasonable role, where claimants can force owners to get land on their terms and allow neighbors to blackmail sellers of land. It is planned to establish nationwide centralized land title registry system using modern electronic tools. At the very least, provincial title registry systems need to be introduced. It is further planned to look into the abolishing of pre-emption laws as well as major amendments into Transfer of Property Tax, which would disallow oral land transfers. Repeal of the above provisions and the introduction of central or provincial registry

5 systems are expected to reduce the caseload of civil courts by more than 75% and allow property to better serve its function as providing collateral for economic development. C. Agriculture and Related Public Sector Institutions

15. The agriculture sector is served by various federal and provincial public sector institutions. Constitutionally, the agriculture sector is a provincial subject, except for cross border and interprovincial matters. At the national level, for the agriculture, livestock, fisheries, and forestry subsectors, federal institutions are mainly responsible for formulating and coordinating national policies and strategies, such as the import and export of agricultural inputs and commodities, setting prices of inputs and outputs, enforcing phytosanitary and quarantine regulations, approval of varieties and seed certification, standardization, compliance of grades and standards, providing support to national research institutions, and managing marine fisheries resources. In the water subsector, the federal government is responsible for developing, operating, and distributing irrigation resources and the drainage network. At the national level, the agriculture sector is also supported by financial institutions such as the agriculture development bankZarai Taraqiati Bank Limited (ZTBL), microfinance institutions, and commodity boards such as tobacco and horticulture development boards, and nongovernment organizations (NGOs). The provincial institutions include agriculture and livestock research institutions, agriculture, livestock and fisheries extension departments, forest department, and irrigation and drainage department. 16. The enforcement standards and quality control with respect to the quality of seed, fertilizer, and pesticide, both by federal and provincial governments, is inadequate. Farmers generally complain of adulterated, outdated, and poor quality inputs. Similarly, services related to research and extension provided by most federal and provincial agencies follow a traditional top-down approach. The services are generally perceived to be ineffective and inaccessible to end users, especially small farmers and entrepreneurs. There is also duplication of research activities and lack of coordination between overlapping institutions. Moreover, more than 90% of the budget is allocated to salaries, leaving less than 10% for administrative expenses and operational costs. 17. The weakest institutional link is the transfer or flow of higher production technology and packages from research institutes to agriculture extension providers, and onwards to the farmers. Farmers generally perceive extension departments to be inaccessible, ineffective, outmoded, and without a problem solving approach. During the evaluation teams field visits, farmers expressed their lack of satisfaction and perceived service delivery by most of these agencies as ineffective and inaccessible. They mentioned that generally these departments do not have much to offer in terms of improved production technology packages, or solutions to their problems. Furthermore, the linkage between research and extension has also weakened over time. With the introduction of local government institutions and devolution and decentralization of various departments, the field staff of the extension departments of agriculture, livestock and fisheries, and forestry are now responsible to the district governments. This has further weakened the chain of command of the respective directorates that were responsible for guidance, backstopping, and monitoring of the field staff and has added more complexity and risk to the implementation and management of development projects. 18. At the federal level, water sector development and its allocation between provinces is the main responsibility of the Water and Power Development Authority (WAPDA). In addition to this, WAPDA is also responsible for construction of the irrigation and drainage network. However, post-completion operation and management is the responsibility of the provincial

6 governments. In addition to this division of responsibility, research in water related issues is mandated to Pakistan Council of Research in Water Resources. However, this institution, because of its restricted budget allocation is largely ineffective. At the provincial level, the irrigation and power departments are responsible for operation and maintenance (O&M) of barrages, and canal and drainage networks, but because of deferred maintenance, the system is in a dilapidated condition. The present gap between water rates and required expenditure on per unit of water basis is about 50% and is widening due to inflation. Moreover, due to political interference and political pressure from the influential land owners the provincial irrigation departments fail to provide equity in the distribution of water. Similarly, the drainage network is also starved of funding for its efficient O&M. Under the National Drainage Program supported by the World Bank, ADB, and other funding agencies, institutional reforms have been initiated to provide autonomy to irrigation and drainage management through creating farmer managed autonomous provincial irrigation and drainage authorities (PIDAs) in each province, and transferring the management of the main, secondary, and tertiary canals and drains to the user groups. Although PIDAs has been enacted and established, the process of institutional reform and of transferring the management of irrigation system is progressing only slowly, mostly due to a lack of political will and resistance from the staff of the Irrigation Department. D. Legal and Regulatory Framework

19. Pakistans outmoded regulatory and legal framework is also considered to be a major constraint to the agricultural sector. In is normally accepted that an enabling environment for economic development is achieved through separation of the powers of executive, judicial, and legislative branches of the state. Government should ideally take up the task of making policies while independent and autonomous institutions should regulate, and the responsibility for controlling and supervising of a particular activity or area of public interest left to a selfgoverning institution. Independence of regulatory institutions not only ensures consistency of policymaking and effective enforcement of legislation but also results in supporting development and prosperity. However, in Pakistan there is often excessive government intervention, too many regulatory departments and a plethora of documentation, which are major impediments in the promotion of private sector business. The most prevalent issues are noted as follows: (i) The creation of regulatory bodies associated with the move toward a free market economy that are non-functional because of the reluctance of the Government to concede power to independent regulators, and also a lack of confidence in the ability of the regulators. Inappropriate human resources in the regulatory bodies through being staffed with former government officials, whereas regulation in the contemporary world is a specialized job requiring a different set of skills with sensitivity to the needs of consumers and investors. A confused relationship between regulatory bodies and the Government whereby regulators become vulnerable to government interference and an ambiguous relationship between the Government and regulators. Dependence of regulation on Government creates inconsistency of policies and ineffective regulation. Furthermore, this issue is further complicated by the reform agenda formulated by the international financial institutions whereby the clearly defined conditions for the elimination of subsidies in electricity, gas, petroleum, and basic food items cause pricing issues to surface that are politically sensitive and that often expose the weakness of newly created regulators. Conflicting goals of certain key institutions such as the Central Board of Revenue where fiscal reforms were compromised over the past 4 years by goals of binding

(ii)

(iii)

(iv)

7 revenue targets, which were an integral part of International Monetary Fund (IMF) programs. This results sometimes in contrived taxation procedures such as backdated dues that can also affect reforms to simplify procedures and expedite tax returns. Government machinery that seems hesitant to make decisions unless other departments/regulators are also brought on board. Even when the regulator and investor are agreed about the need to change certain regulations, the procedure is cumbersome, due to reluctance by some ministries to take a decision although the issue may fall within the ambit of their responsibility. The need for additional approvals or no objection confirmation and the subsequent delays can add to the frustration of investors. This creates a bureaucratic maze and inconsistency of policies that increase the costs of doing business.

(v)

E.

Growth and Productivity Trends

20. Agriculture in Pakistan (including fishing and forestry) registered an average annual growth rate of 5.4% during the 1980s, followed by 4.4% in the 1990s, and an average of 3% in the early 2000s (Figure 3).The slowdown in the growth rate during the 1990s was because of floods in 1998 and a prolonged drought and reduced river flows during the later half of the decade, which continued until 2001/2002, and beyond especially in Balochistan. Favorable weather and improved river flows resulted in an impressive growth of 7.5% for 2004/2005. Figure 3 summarizes the agriculture sectors performance since 1999/2000.11 Figure 3: Agriculture Sectors GDP Contribution and Annual Growth Rate

8.0 6.0 4.0 Percent 2.0 0.0 -2.0 -4.0 Grow th Rate (%) Agriculture Sector GDP ($ Billion)

17.5 17.0 16.5 $ billion 16.0 15.5 15.0 14.5 14.0 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 6.1 15.4 -2.2 15.1 0.1 15.1 4.1 15.7 2.2 16.0 7.5 17.2 13.5

GDP = gross domestic product. Source: Pakistan economic surveys.

21. Table 1 shows agricultures contribution to GDP from 1999/00 to 2004/05, which reached $17.2 billion in 2004/05 (equivalent of PRs1,034.3 billion) from an estimated $15.4 billion (equivalent of PRs923.6 billion) in1990/00. Table 1 also indicates the share of the
11

The main source of data on ANR sector performance are production figures from the Revenue Department, Food Department, processing mills, and the commodity exchanges.

8 subsectors to the total in percentage terms. All crops (major and minor crops) and the livestock subsectors each range between 4750% with the balance shared by the forestry subsector (23%) and the fishery subsector, which contributes around 12%. Table 1: GDP Contribution by Agriculture Subsectors
Year 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 Total ($ Billion) 15.4 15.1 15.1 15.7 16.0 17.2 Major Crops 37% 34% 33% 34% 34% 37% Minor Crops 14% 13% 13% 13% 13% 12% All Crops 51% 48% 46% 47% 47% 49% Livestock 45% 48% 50% 49% 49% 47% Fishing 2% 2% 1% 1% 1% 1% Forestry 3% 3% 3% 3% 3% 2%

GDP = gross domestic product. Source: Computed from data in Economic Survey 20042005.

22.

Table 2 shows the subsector growth rates over the same period. Table 2: Growth Rates of Agriculture Sector by Subsectors (%)
Year 2000/01 2001/02 2002/03 2003/04 2004/05 Total -2.2 0.1 4.1 2.2 7.5 Major Crops -9.9 -2.5 6.8 1.9 17.3 Minor Crops -3.2 -3.7 1.9 2.6 3.1 All Crops -8.1 -2.8 5.5 2.1 13.5 Livestock 3.8 3.7 2.6 2.8 2.3 Fishing -3.0 -12.3 3.5 2.0 2.1 Forestry 9.1 -4.4 11.1 -5.5 0.4

Source: Pakistan Economic Survey 20042005.

23.

A closer look at Table 2 and

Figure 4 suggests that, despite a declining growth rate for the overall agriculture sector (except for 2004/05) the livestock subsector has registered a constant, though modest, increase throughout. Similarly, the forestry and fishing subsectors, despite erratic growth rates, have also made a modest contribution. The statistics, however, indicate that the fluctuation in the GDP of the crop subsectors, especially major crops, has a direct bearing on the overall sector performance. For example, in 2000/01 major crops, which contributed 37% to the sector GDP, reduced the sector growth rate to -2.2%, when its growth rate fell to -9.9%. Similarly, in 2004/05 with the accomplishment of an extraordinary growth rate of 17.3% by the major crop subsector (due to a bumper cotton crop) its direct impact resulted in a growth rate of 7.5% for the overall sector.

Figure 4: Index of Contribution of Agriculture Sector and Subsectors

120.0 115.0 110.0 105.0 100.0 95.0 90.0 85.0 80.0 Total Major Crops Minor Crops Livestock Fishing Forestry 1999/00 100.0 100.0 100.0 100.0 100.0 100.0 2000/01 97.8 90.1 96.8 103.8 97.0 109.1 2001/02 97.9 87.9 93.3 107.6 85.1 104.2 2002/03 102.0 94.0 95.0 110.4 88.0 115.8 2003/04 104.2 95.7 97.5 113.4 89.8 109.5 2004/05 112.0 112.3 100.5 116.0 91.7 109.9

Source: Pakistan economic surveys.

24. Further breakdown of the GDP contribution by the major crops shows that the share of wheat in the total contribution from the major crops subsector averaged around 40% followed by cotton, contributing between 22% and 25%, rice about 15%, and between 11% and 13% by sugarcane.12 The balance is contributed by the remaining crops, of which maize and gram together contribute about 5%. The contribution of each crop depends on the cropped area and yield levels which are both related to the availability of irrigation from the canal system. 25. Figure 5 and Table 3 show that the performance of the agriculture sector largely depends on the scale of production of wheat, cotton, rice, and sugarcane. Wheat and cotton have the most influence on the overall sector GDP. During the 200/01 and 2001/02 cropping seasons, which suffered low surface water availability and drought, the decline in wheat production was the dominant factor in explaining the poorer performance of the sector, while the recovery in the performance of wheat and significant increase in cotton production has reversed the falling growth rates in more recent years. The bumper cotton and wheat crops in 2004/05 followed by improvement in rice output are seen to be the main factor for the upsurge in sector performance. This higher growth rate was achieved despite a decline in sugarcane production.

12

Economic Wing. December 2004. Agriculture Statistics of Pakistan 20032004. Islamabad: Ministry of Food, Agriculture, and Livestock.

10 Figure 5: Index of Agriculture Sector GDP and Contribution by Major Crops

135.0 125.0 115.0 105.0 95.0 85.0 75.0 Agriculture Sector GDP Wheat (million MT) Cotton (million bales) Rice (million MT) Sugarcane (million MT) 1999/00 100.0 100.0 100.0 100.0 100.0 2000/01 97.8 90.0 95.5 92.3 94.2 2001/02 97.9 86.3 94.6 75.0 103.7 2002/03 102.0 91.0 91.1 86.5 112.5 2003/04 104.2 92.4 89.3 92.3 115.3 2004/05 112.0 100.0 130.4 96.2 97.8

GDP = gross domestic product, MT = metric ton. Source: Agricultural statistics of Pakistan 20032004.

26. Table 3 also shows that per ha yields of most crops have been generally increasing with the average growth rate for production and yield of wheat and cotton the most impressive. In the case of rice, the increase in production was largely due to increase in the area, while the performance of sugarcane in terms of area, production, and yield is relatively stagnant. Because of the new water regime as a result of drought and reduced water supply, there has been a shift to low delta crops such as maize and oilseeds, which have a shorter duration and lower water requirements. Crop diversification, as a water shortage coping mechanism, has recently been initiated and is being actively promoted by the Ministry of Fisheries, Agriculture, and Livestock (MINFAL). As a result, the more recent crop statistics show that there is a shift towards nontraditional oilseeds, vegetables, fruits, and condiments. Table 3: Area, Production, and per Hectare Yield of Major Crops
Wheat Rice Cotton Sugarcane Area Production Yield Area Production Yield Area Production Yield Area Production Yield (MT (million (million (MT (MT (million (million (MT (million (million (million (million Year per ha) ha) per ha) tons) tons) per ha) ha) per ha) ha) tons) tons) ha) 1995/96 8.4 16.9 2.0 2.2 4.0 1.8 3.0 1.8 0.6 1.0 45.2 47.0 1996/97 8.1 16.6 2.1 2.3 4.3 1.9 3.1 1.6 0.5 1.0 42.0 43.5 1997/98 8.4 18.7 2.2 2.3 4.3 1.9 3.0 1.6 0.5 1.0 53.1 55.1 1998/99 8.2 17.8 2.2 2.4 4.7 1.9 2.9 1.5 0.5 1.2 55.2 47.8 1999/00 8.5 21.1 2.5 2.5 5.2 2.1 3.0 1.9 0.6 1.0 46.3 45.9 2000/01 8.2 19.0 2.3 2.4 4.8 2.0 2.9 1.8 0.6 1.0 43.6 45.4 2001/02 8.1 18.2 2.3 2.1 3.9 1.8 3.1 1.8 0.6 1.0 48.0 48.0 2002/03 8.0 19.2 2.4 2.3 4.5 2.0 2.8 1.7 0.6 1.1 52.1 47.3 2003/04 8.2 19.5 2.4 2.5 4.8 2.0 3.0 1.7 0.6 1.1 53.4 49.7 2004/05 8.3 21.1 2.5 2.5 5.0 2.0 3.2 2.5 0.8 0.9 45.3 47.9 Agr% 0.0 2.8 2.8 1.8 3.1 1.1 1.0 4.9 3.9 0.3 0.8 0.7 ha = hectare, MT = metric ton. Source: Pakistan economic surveys.

11 F. Water Resources

27. Water resources are vital to Pakistans economic well-being, and their improved management is vital to poverty reduction, especially in the rural areas where the incidence of poverty is higher relative to urban areas. For over a century, Pakistans water resources have been progressively developed and harnessed to build the worlds largest canal irrigation system providing irrigation in the Indus River Basin, and other irrigation systems in the country. However, as river flows are dependent upon snow melt from the mountains, and the irrigation facilities have a relatively low amount of storage, future expansion and regulation of river flows requires additional storage. Currently, development of additional storage is in abeyance for want of political consensus on interprovincial water resource sharing among the provinces. Furthermore, because of increasing population, the availability of surface water per capita is declining, and is projected to be less than 1,000 cubic meters (m3) per capita per year by 2010.13 A combination of factors has contributed to Pakistans water shortage including high population growth, inadequate knowledge about the ecosystem, neglected water infrastructure, and climate change. 28. Of Pakistans total cropped area, 80% is irrigated while the remaining 20% is rainfed. About 78% is irrigated by canals, and/or canal plus government and/or private tubewells, while 17% of the farmed area is irrigated solely by tubewells and shallow wells. The remaining 5% is irrigated by tanks, ponds, and streams.14 29. Groundwater accounts for about 40% of the total water available for irrigation, and conjunctive use of ground water with surface water is important, especially in Punjab province. Table 4 shows that since the mid-1990s the number of tubewells has increased by over 50%. Consequently, in many areas, ground water is being over-exploited reducing the water table, and with adverse ecological impact on the land where it is being applied, particularly in areas where fresh groundwater recharge is limited. Moreover, in areas where groundwater is of marginal quality, hazardous salts are being transported to the top soil, adversely affecting productivity. Table 4: Surface and Ground Water Availability, Use Ratio, and Number of Tubewells
Year 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 Surface Water at Farm Gate (MAF) 81.5 81.7 82.0 82.7 83.4 84.2 84.3 84.5 89.5 Ground Water (MAF) 49.4 50.4 40.2 51.1 49.9 50.6 50.3 50.0 52.1 Total Water Availability (MAF) 130.9 132.1 122.2 133.8 133.3 134.8 134.6 134.5 141.6 Ratio Surface Water to Ground Water 0.6 0.6 0.5 0.6 0.6 0.6 0.6 0.6 0.6 Number of Tubewells 485,050 489,601 531,699 531,692 541,839 545,569 680,473 762,902 768,270

MAF = million acre feet (1 million acre feet = 1.235 billion cubic meters). Source: Pakistan agricultural statistics. 2004.

13

Briscoe, John, Usman Qamar, Manuel Contiijoch, Pervaiz Amir, and Don Blacmare. 23 June 2005. Pakistans Water Economy is Running DryPakistan Water Strategy Paper (Draft). Washington, DC: World Bank. 14 Economic Wing. December 2004. Agriculture Statistics of Pakistan 2003/04. Islamabad: Ministry of Food, Agriculture, and Livestock.

12 30. Proper drainage was not generally included in the original design of irrigation systems. This has contributed to rising water tables and salinity threatening the sustainability of irrigated agriculture. Conveyance losses and low delivery and application efficiency is the primary cause of waterlogging and salinity, coupled with inadequate drainage. Only about 35% of the water delivered by the irrigation system is used directly by crops. Most evaporates or seeps into the aquifer, causing groundwater tables to rise unless adequate drainage facilities are provided. Consequently, efficiency of water use in Pakistan is low by world standards. Irrigation relies on run of river flows and the 19.4 billion m3 of storage only represents 9% of annual flows and is low when compared with the world average of 40%, which ranges from 33% for India, 347% for the Nile river basin, and 497% for the Colorado River basin. Table 5 presents comparative world statistics on irrigation use and efficiency in cereal production. Table 5: Comparative Irrigation Water Use and Cereal Production Irrigation Water Use Average Annual Cereal Cereal Production Per m3 3 Per Capita (m /year) Production Per Capita (kg) of Irrigation Water (kg) 192 1,674 8.72 785 1,227 1.56 401 328 0.82 569 221 0.39 1,226 162 0.13

kg = kilogram, m3 = cubic meter, USA = United States of America. Source: Food Security & Sustainable Agriculture in India, IWMI Publication No. 60, 2003.

Country Canada USA China India Pakistan

31. Table 6 presents some comparative data for a range of ADB member countries that have a high reliance on irrigation. The data show Pakistans comparatively high utilization of its available water resourcesboth surface and groundwater. In terms of the share of the total water resource that originates externally, Pakistan has a relatively high dependence at 67%, which has serious implications for water management, especially for flood management, and political repercussions as Pakistans water flows are vulnerable to Indias water plans and requires cooperation from India.15 Pakistans per capita resource is the lowest of the group (except for Korea) and on a par with India. Similarly, Pakistan has the highest rate of utilization of the total available freshwater resources at 61%. In terms of groundwater withdrawal, Pakistans annual rate of 489.5 m3 per capita is also the highest by a wide margin. This information clearly indicates the high reliance that Pakistan has on its available water resources for irrigation and the importance of increasing the efficiency of water use when there is limited scope for increasing the supply and where there is internal political division between the provinces for construction of dams for storage. Water experts have suggested that Pakistan should develop alternatives such as water recycling and preventing water losses by lining canals and reducing seepage. If it does not improve its water management and storage facilities Pakistan is likely to become one of the worlds most water-scarce countries.

15

In 1960, Pakistan and India signed the Indus Water Treaty, which was an internationally-brokered water-sharing agreement that is still upheld and implemented by both countries. According to the agreement, of the five rivers originating in India that contribute to the Panjnad tributary of the Indus, India is allowed unrestricted use of the three eastern rivers and Pakistan is allowed use of the two western rivers, but which have a highly erratic flow.

Table 6: Freshwater Availability and Withdrawal in DMCs

Annual Renewable Freshwater Resources External Flow As Share of Total AWR (%) 15 72 91 Per Capita 3 (m ) 2,986 3,619 8,808 Total (billion m3 ) 26.11 16.53 14.64 Per Capita (m3) na 2,186 134 Annual Freshwater Withdrawals As % of Total Freshwater Resources 40.2 56.8 1.2 Groundwater Groundwater Withdrawal Per 3 Capita (m ) na na 97.6 na 47.1 na na 143.9 55.1 132.0 19.0 149.1 na na 489.5 82.8 na 398.7 50.0 100.3 334.3 11.9

Country Afghanistan Azerbaijan Bangladesh

Total AWR (billion m3) 65.0 29.1 1,210.6

% for Domestic 5 12 36

% for Industry 25 2 10

% for Agriculture 70 86 54

Cambodia 476.2 75 36,340 0.52 66 0.1 5 18 77 PRC 2,829.6 1 2,206 525.46 439 18.6 na na na India 1,907.8 34 1,891 500.00 588 26.2 5 3 92 Indonesia 2,838.0 0 13,381 74.35 407 2.6 6 1 93 Kazakhstan 109.6 31 6,777 33.67 2,019 30.7 2 17 81 Korea 69.8 7 1,493 23.67 531 33.9 26 11 63 Kyrgyzstan 46.5 0 9,449 10.09 2,219 21.7 3 3 94 Laos 333.5 43 63,175 0.99 260 0.3 8 10 82 Malaysia 580.0 0 26,105 12.73 633 2.2 11 13 76 Myanmar 165.0 100 3,456 3.96 102 2.4 7 3 90 Nepal 210.2 6 9,122 29.00 1,397 13.8 1 0 99 Pakistan 255.0 67 1,805 155.60 1,267 61.0 2 2 97 Philippines 479.0 0 6,332 55.42 811 11.6 8 4 88 Sri Lanka 50.0 0 2,642 na 573 na 2 2 96 Tajikistan 79.6 17 3,077 11.87 2,095 14.9 4 4 92 Thailand 409.9 49 6,526 33.13 596 8.1 5 4 91 Turkmenistan 60.9 98 12,856 23.78 597 39.0 1 1 98 Uzbekistan 114.4 86 4,598 58.05 2,626 50.7 4 2 94 Vietnam 891.2 59 11,406 54.30 814 6.1 4 10 86 AWR = annual water resources, DMC = developing member country, m3 = cubic meter, na = not available, PRC = Peoples Republic of China. Source: Water Research Institute, based on various data.

13

14 32. Much of the canal distribution system is in a poor state of repair and operates inefficiently. Management of the system suffers from antiquated methods and technology and lack of investment compounded by the irrigation bureaucracy. There are also serious issues concerning a lack of equity and equality among water users. However, it is expected that with the transfer of the management of irrigation systems to farmer organizations under the National Drainage Program, equity issues concerned with supply of water, particularly between head and tail-end farmers will be corrected (at least in part), and an improvement in O&M. Nevertheless, much work will remain to achieve the goal of equitable irrigation for all users and the water sector will require significant investment to improve water allocation sufficient for intensive agriculture. G. Issues

33. Notwithstanding the recent buoyant growth in agriculture, the sector is considered to be performing below its potential. Agriculture is still constrained by the neglect of the non-crop sector, inefficient technological development, failing extension services, sub-optimal use of water and poor marketing. The main constraints include (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) inefficiencies in rural service delivery, such as extension, research, and irrigation supplies; poor quality seed, and adulterated and outdated agrochemicals; inadequate infrastructure such as drainage, rural road networks, farm commodity markets, warehouses, and cold storage facilities; deferred maintenance of canal and drainage networks; lack of compliance with tenancy laws; limited rural financial markets;16 lack of incentives for the private sector and a lack of a level playing field through undesirable market interventions;17 antiquated land record and documentation system; and an outmoded regulatory and legal framework.18

34. The situation is further aggravated by recurring droughts and the lack of capacity to adjust cropping patterns and production packages to changing water availability situation, both precipitation and river flows. The available varieties and the production packages are not suited to drought conditions and the agriculture research and extension system lacks the capacity to develop and disseminate appropriate varieties and production packages. There is also a need to shift cropping patterns in favor of crops with higher returns to per unit of water rather than per unit of land. 35. Not many sector studies of the agriculture sector have been undertaken, except for occasional strategy studies or subsector and commodity specific studies. Policy decisions are mostly based on crisis management and the need to provide a quick fix to a problem. However, under the Agriculture Sector Program Loan II (ASPL II) project, a number of studies have been
16

According the State Bank of Pakistan the total agricultural credit disbursement during 2003 was only about 20% of total agricultural credit requirement, highlighting the rural sectors lack of a functioning financial market. 17 Such as budgetary support to public sector agencies dealing with the import and marketing of fertilizer; compulsory procurement of wheat for stabilizing prices, maintaining strategic reserves and distribution to processors; restrictions on commodity movements, import, and export; and the setting of minimum support/guaranteed prices. 18 Most of the Acts to regulate malpractices such as branding, hoarding, adulteration, seed purity and quality, weights and measures, grading, etc., are antiquated and need to be aligned with emerging international standards and World Trade Organization regulations. Moreover, the present regulatory framework does not encourage the private sector, because of lengthy and cumbersome procedures involved in setting up new agribusiness and enterprises.

15 initiated, such as wheat policy reform, and institutional reorganization of research and extension departments. III. A. STRATEGIES AND POLICIES

Government Strategies and Policies 1. General

36. Over the review period, the Government has produced four five-year plans (FYP), a Ten-Year Perspective Plan, a Pakistan Poverty Reduction Strategy Paper, and numerous sector policies and plans. More recently (June 2005), the Government has approved a Medium Term Development Framework 20052010 (MTDF). Pakistan has been well served with policy and strategy direction but in general the level of success in achieving the goals and targets has been limited. The policy statements, although well intentioned do not appear to be always consistent with the level of funding available and there has been a lack of rationality between sectors (see para. 39 for a contemporary example). Moreover, the economic and political situation has been affected by the frequent change of governments, sanctions following the nuclear tests, and the imposition of military rule. Table 7 provides a summary of the Governments planning documents. Table 7: Government of Pakistan Strategies and Policies Title Sixth Five-Year Development Plan Seventh Five-Year Development Plan Eighth Five-Year Development Plan Ninth Five-Year Development Plan (not implemented) Ten-Year Perspective Development Plan and Poverty Alleviation Strategy Three-Year Development Program Medium Term Development Framework
Source: Asian Development Bank documents.

Period Covered 1983/841987/88 1988/891992/93 1993/941997/98 1999/002004/05 2001/022010/11 20012004 20052010

37. The focus of the most recent planning document, the MTDF, is to sustain a high rate of economic growth with macroeconomic stability. It identifies five pillars of growth: (i) water resources development, (ii) transport and communications, (iii) energy security, (iv) human resources development, and (v) second generation reforms. The strategy for the ANR sector particularly mentions the development of livestock and fisheries in addition to the development of crops. For the manufacturing sector, the strategy highlights an enhancement of the production base, an expansion of the social and physical infrastructure, and the provision of an enabling environment to foster local and foreign investment and enhance public and private savings. 38. The MTDF projects the GDP growth rate to increase from 7.0% in 2005/06 to 8.2% by 2009/10. By sector, the projected annual average GDP growth rates are 5.2% for agriculture, 11.6% for manufacturing, and 7.3% for services. It is acknowledged that achievement of these growth rates will require a major investment in the production, dissemination, and absorption of knowledge. It is considered that growth cannot be sustained alone by the agriculture sector, the textile-dominated manufacturing sector, or the low-productivity services sector, even with a modernization of these sectors. Further development and industrialization of the economy is

16 also considered necessary. Especially through expanding the manufacturing production base by the development of engineering goods, electronic, chemical, and other high technology and value added industries. International competitiveness will be leveraged by the further liberalization of industrial policy, a more market-based regulatory regime and emphasis on the formation of cluster-based technology parks embodying research and development and human resource development. 39. Like the earlier plans, the MTDF shows a disconnect between the overall economic framework and the development plans, funding needs, and targets for individual sectors. For example, for the livestock subsector, the MTDF projects annual growth rates for meat and milk production of 6.5% and 8.0% until 2009/10, respectively, while historical growth for the last 5 years have only averaged 3.1% and 2.9% per annum. For milk production, the projection represents a 47% increase from 29.5 million tons in 20042005 to 43.3 million tons in 2009 2010. The report also acknowledges that fodder production is a major limiting factor for livestock production and that there is currently a shortage of 30.85 million tons of total digestible nutrients per year in the country. Such an increase in production has implications for basic changes in agricultural land use and production to produce the required fodder that do not appear to have been underpinned by a detailed analysis of the sector. a. Agriculture

40. In general terms, Pakistan has pursued economic development with the long-term objective of raising the average level of living of its people. The role of the agriculture sector in achieving this long term objective has been to (i) (ii) (iii) (iv) (v) increase production of food to satisfy and sustain price stability; increase production of agricultural products for domestic industries and exports to increase incomes and foreign exchange earnings; expand employment opportunities, both within traditional production systems and in industries integrated with agricultural and based in rural areas; as a source of capital for government investment in primary infrastructure and for the expansion of secondary industry; and provide increased access to markets and public sector activities for the landless, marginal tenants, and land owners.

41. The strategies employed by successive governments to attain these goals have undergone significant changes as have the policy instruments used to implement them. In varying combinations, the government of the day has controlled producer prices of the major crops through various procurement programs; set prices and managed the distribution of sugar, subsidized flour, and vegetable oil; and determined prices of irrigation water, fertilizer, seeds, and agrochemicals. In the past, the Government has also participated in the production, importation, and domestic marketing of key inputs such as fertilizer, pesticides, tractors, and tubewells. 42. However, more recently, the Government has adopted policies to reduce its direct influence in the economy with a move toward a market-led economy and a removal of distortions caused by subsidies and monopolistic interference. In 1997, the Government, realizing the importance of the agricultural sector in the economy, announced a comprehensive package of incentives designed to improve production. These included an increase in support prices, increased credit availability, improved drainage and irrigation, and the promotion of other activities together with the aim of achieving self sufficiency in wheat, the staple food crop, by

17 1997/98. These policies have followed on into the current policy (as stated in the MTDF) with an added emphasis on export-led growth and the development of agribusiness and post-production added value. The performance of the agricultural sector has improved since the introduction of reforms with a 12% increase in sector GDP since 1999/00. While some of this increase is attributed to favorable weather for cotton production, sector performance has improved as attested to by this statement in the MTDF In 20042005, the agriculture sector registered an all time high growth of 7.5 per cent due to farmer friendly government policies, favorable weather conditions and improvement in the availability of water. B. ADBs Country Strategies for the Sector

43. Since 1985, ADB has produced five main strategy documents to guide its operations in Pakistan (Table 8) and an interim operational framework. Nuclear tests carried out by Pakistan in 1998 triggered international sanctions, effectively suspending implementation of the 1995 strategy. A country operational framework was prepared to cover a reduced level of operations over 1999/2000. Preparation of a new country strategy was somewhat delayed due, in part, to take into account changed circumstances following the 11 September 2001 terrorist attack on the United States. A country assistance plan for 2001/2003 (approved in December 2000) provided some strategic direction pending preparation of a new strategy. Table 8: ADBs Country Strategy Documents for Pakistan Operations Title Strategies for Economic Growth and Development: The Banks Role in Pakistan The Banks Operational Strategy in Pakistan Country Operational Strategy Study for Pakistan Country Operational Framework Country Strategy and Program: Pakistan Country Strategy and Program Update Country Strategy and Program Update Country Strategy and Program Update
Source: Asian Development Bank documents.

Period Covered 19851989 19901994 19951998 19992000 20022006 20042006 20052006 20062008

44. The main objectives of each of the country strategy documents have been variously stated as (i) (ii) (iii) (iv) (v) (vi) 1. balanced growth (1985); self-sustaining growth (1990); human resource development with economic growth as a secondary objective (1995); improved economic efficiency and export performance, enhanced human and social development, and strengthened governance (1998); good governance, poverty reduction, sustainable pro-poor economic growth, and inclusive social development (2002); and poverty reduction (2003 and 2004). Agriculture and Natural Resources Sector

45. The timeline of ADBs stated strategies for the agriculture sector embedded in the country strategy documents since 1985 is summarized in Table 9 below.

18

Table 9: ADBs Country Strategies for Agriculture 19852006

Strategy Document
19851989

Strategy
Agriculture replaced the energy sector as the major beneficiary of ADB resources. Key elements of strategy for this sector were the modernization and maintenance of irrigation structures that were likely to boost productivity. In addition, research and extension in industrial crops, fisheries, livestock development and forestry, and credit for agro-industries were earmarked for ADB support. Priorities remained heavily weighted in favor of irrigation and drainage, receiving nearly 70% of the allocation. Major thrust of the development program was to move from self-sufficiency to commercial exports. Reduction of subsidies and additional resources oriented to research and extension, grain storage, livestock forestry and fisheries, and to diversification of the production base. Shift to agriculture contributed to increasing productivity. Improvement and expansion of irrigation and drainage facilities have been the focus of ADB operations. ADB's efforts to increase productivity is geared towards (i) finding appropriate agronomic practices to realize full yield potential and quality and availability of inputs; (ii) dissemination to and awareness by farmers of appropriate crop technology packages; and (iii) adequate marketing, storage, and processing facilities. There should be efforts to improve agricultural research and extension services. The agriculture sector should remain a major area of ADB intervention in support of growth and should be closely linked with poverty reduction and environmental protection. ADB's priorities in the sector should be rehabilitation, maintenance, and modernization of the existing irrigation infrastructure, and control of salinity and waterlogging. Adequate provisions in projects should be made for training. Selected integrated rural development projects should target areas that are particularly poor and isolated. ADB should also address the issue on rural financial markets. ADB should provide technical assistance on the formulation of a Rural Financial Market Development Strategy. Efficiency in agriculture sector will be increased through (i) removal of policy distortions and reforming water resources management, (ii) support to rural credit for poverty reduction through microfinance development, and (iii) improvement of productivity under integrated pest management. Rural jobs will be created through assistance for a rural development project in Malakand, a farmer-managed irrigation in the Punjab, several other area development loans, and rural microfinance. ADB will support higher growth in rural areas by focusing on (i) the right policy and institutional framework; (ii) increasing agriculture productivity and diversification, strengthening research and extension services, and expanding the role of the private sector in storage and agricultural support services; (iii) increasing non-farm income by developing agri-business and rural small and medium enterprises; (iv) promoting rural-urban linkages such as rural roads; (v) expanding rural economic infrastructure especially for irrigation, drainage, and water resource conservation and management; (vi) promoting financial intermediation, mobilizing savings, and enhancing access to credit in rural areas; and (vii) investing in infrastructure where poverty incidence is high. Future assistance includes support for rural development and for agri-business development and forestry sector development.

19901994

19951998

19992001

20022003

20042006

Source: Asian Development Bank documents.

46.

ADBs stated strategic focus in the Country Strategy and Program Update 2005 is (i) (ii) (iii) (iv) promoting a sustainable, modern, and diversified agricultural production and marketing system for improved competitiveness and added higher value; improved institutional environment for private sector investment; support for policy and institutional reforms in the water sector; and rehabilitation and upgrading of existing infrastructure for irrigation, drainage, and flood protection.

19

2.

Consistency with Government Priorities for Agriculture

47. ADBs strategies for the agriculture sector have been generally consistent with the Governments priorities specified in its planning documents over the 20-year period. Comments are provided in Table 10. Table 10: Comments on Consistency with Government Priorities for Agriculture Strategies for Economic Growth and Development 19851989 ADB strategy is consistent with the Sixth Five-year Development Plan on (i) the improvement of on-farm water management; (ii) research and extension services; (iii) diversification of agriculture; (iv) availability of agricultural credit with the use of modern technology and optimum combination of various inputs; (v) marketing and storage; and (vi) rapid expansion of oilseed. County Operation Strategy 19901994 Strategy is consistent with Government's plan on (i) improving the availability of inputs; (ii) developing high-yielding, disease resistance varieties of crops; (iii) having support prices for major and minor crops; and (iv) improved efficiency in the on-farm water management program. Country Operational Strategy 19951998 The country operational strategy was consistent with the plan on rehabilitation, maintenance, and modernization of irrigation infrastructure, control of salinity and waterlogging, improving operation and maintenance funding; reviewing support prices of different crops; improvement of the availability of credit to farmers; and additional intervention in research and extension. Country Operation Framework 19992000 Consistent with Government priorities but issues not specifically addressed. Country Assistance Program 20012003 Consistent with Government priorities. Agricultural credit would be provided to small and medium farmers. Country Strategy and Program 20022006 The country strategy and program was consistent with the Ten-Year Perspective Development Plan 20012011 on improving income of farmers by providing incentives through the support price mechanisms; strengthening agricultural institutions for education, research, and development; promoting the private sector in undertaking production and distribution of good-quality seed; promoting production and export of high-value crops; improving marketing infrastructure; ensuring availability of agricultural credit for small and medium farmers; and constructing farm-to-market roads.
Source: Asian Development Bank documents.

C.

Assessment of ANR Strategies in Country Strategies

48. ADBs strategies for ANR sector operations embedded in country strategies were rated using a common set of criteria following the approach used (described in Appendix 1) in the recent SAPE. The objective of the assessment is to rate the quality of the strategy in the ADBs country strategy documents against the set of criteria that take into account ADBs development objectives, Governments plans and objectives, and consistency and coherence. A higher overall rating indicates that the strategy would be more effective in achieving the objectives. A

20 separate score was given for the level of innovation.19 The results are presented in Table 11. The strategies stated for each plan period are described in Appendix 2. Table 11: Rating of ANR Strategies in ADB Country Strategy Documents Title Strategies for Economic Growth and Development: 1985 The Banks Operational Strategy in Pakistan: 1990 Country Operational Strategy Study for Pakistan: 1995 Country Operational Framework: 19992000 Country Assistance Plan 20012003 Country Strategy and Program: 20022006
Source: Consultants evaluation using standard criteria.

Overall Rating Rating for (%) Innovativeness (%) 25 30 31 30 35 0 44 50 38 30 67 50

49. The scores for the plans vary from 25% in 1985 to 67% in 2002. The 1985 and 2002 strategies were the most comprehensive in terms of sector analysis and the latter 2002 documents showed that there had been more stakeholder consultation and involvement than the 1995 and 1990 strategy documents. Generally, the strategy documents highlighted the main issues facing the ANR sector (rehabilitation and modernization of the irrigation sector, removal of subsidies and price distortions, support to private sector), and noted problems that had been encountered with implementation of the country operational strategy and CSP in previous periods, although these had not been analyzed in detail. However, there was a lack of definition of production indicators or timebound targets for the future (perhaps in recognition of the vulnerability of agriculture to the effects of weather and external pricing effects).20 There was a common thread of the need for reform of water management, removal of price distortions, better availability of credit, more private sector activity, and the need to increase productivity and efficiency, as reserves of uncultivated land and extra water resources for expansion are finite. There was little or no discussion on alternative development options that could be considered, but there was evidence of the incorporation of popular themes in the strategy, such as advocating small and medium enterprises as a means of obtaining growth. Although there was consistency in support for the sector, there was a lack of a stated commitment to central issues to be supported as part of a longer term ongoing strategy or sector roadmap. Coordination and synergy with other development agencies was mentioned in the ADB documents as a positive aspect of the strategy. Details of the rating for the criteria are presented in Table 12.

19

Following the methodology adopted for the SAPE 2005, a separate rating was given for innovation on the grounds that a decision to innovate or not should be the product of an analysis of the particular situation rather than a mandatory requirement. Innovation within the sector was not judged on the basis of broad programmatic changes such as a shift to policy-based lending or a focus on single provinces. Rather, evaluators were looking for evidence of new ways of dealing with old problems. 20 It should be acknowledged that for much of the period quantitative progress indicators where not required by ADB, and as noted there are inherent difficulties in defining such indicators.

21 Table 12: Criteria Ratings for ANR Strategies in ADB Country Strategy Documents
Year of Publication of Strategic Document 1985 1990 1995 1999 2001 2002 Criteria 1. Progress indicators specified? 2. Baseline described and quantified? +/+/+/+/+/3. Quantifiable timebound targets set? +/4. Strategic gap identified? 5. ADBs broader strategic agenda considered +/+/6. Compatible with country policies +/+/+/+/7. Coordination with other partners +/+/+/8. Analytical basis +/+/+/+/9. Consideration of options & justification for selected option? 10. Stakeholder involvement +/+/+/11. Internal consistency and coherence evident? 12. Critical mass and focus? +/+/+/+/+/+/13. Assumptions and risks identified? +/+/+/+/14. Continuity? +/+/+/+/+/15. Partnerships? +/16. Positioning +/17. Performance monitoring and evaluation provided for? +/+/18. Innovativeness? +/+/+/+/+/19. Flexibility? +/Source: Consultants assessment using standard criteria. ADB = Asian Development Bank; = yes; = no; +/- = to some extent.

50. ADBs ANR sector strategies were closely aligned with the Governments strategies for the sector as expressed in the 5-year development plans. This alignment is a function of the process in which the ADB has little opportunity to deviate from the Governments priorities and plans in the formation of the CSP. ADB is constrained by this process in its scope for applying innovation to its strategic plans. Therein lies the problem: ADBs deficiency in being able to influence policy and strategy requires a closer engagement and dialogue with Government on the formulation of its support, which in turn must be underpinned by comprehensive sector analysis to define the appropriate direction and priorities. ADBs negotiation strength and influence has to be from a position of strength and knowledge based on analytical analysis. Furthermore ADB should be more selective in its support and rather that agreeing to align support to Government priorities, that may change according to political expedience it should selectively support those subsectors where it has a comparative advantage in accordance with its own policy and priorities. Nevertheless ADBs strategy must be cognizant of national policies and priorities and it is a matter of balance between being too independent and the need to have commitment and ownership by the Government. IV. A. Public Sector Loans DESCRIPTION OF ADBS OPERATIONS

51. Since the commencement of its operations in Pakistan, 29% of ADB loans (in terms of numbers) have been provided to the ANR sector, followed by 22% to energy, 15% to social infrastructure, 15% to finance, 8% to transport and communication, 4% to industry and non-fuel minerals, and 6% to other sectors. Figure 6 shows the relative importance.

22 Figure 6: Breakdown of ADB Loans to Pakistan

Others 7% Health, Nutrition, and Social Protection 15% Industry and Trade 4% Transport and Communications 8% Finance 15% Agriculture and Natural Resources 29%

Energy 22%

Source: Asian Development Bank data.

52. Since 1985, the ANR sector has received 43 loans with a total amount of $2.723 billion of which $1.267 billion is allocated to current projects. A summary of the loans according to ADBs current subsector classification is shown in Table 13. Agricultural production has received the greatest amount of funding over the period, followed by irrigation. A full list of the loan projects is included in Appendix 3. Table 13: Breakdown of ANR Loan Category and Amount Value ADB Subsector Classification Number of Loans ($ million) % of Total Value Agriculture Production 13 1,008 37.0 Fishery 1 11 0.4 Forestry 2 34 1.2 Irrigation 11 969 35.6 Livestock 1 24 0.9 Water Resources 3 190 7.0 Agriculture Sector Development 4 133 4.9 Multisector 8 354 13.0 Total 43 2,723 100.0
ADB = Asian Development Bank, ANR = agriculture and natural resources Source: Asian Development Bank data.

53. For the purpose of this report, these loans have been divided into three groups: (i) 10 rural development loans (23% of the total number), (ii) 17 water sector loans (40%), and (iii) the remaining 16 loans (37%) for other ANR subsectors including program loans. In terms of value, the rural development category has received 14%, water resources 48%, and the remaining ANR other category 38%. 54. From an analysis of this breakdown in terms of loan approvals, a clear trend is evident with the rural development sector maintaining an increasing allocation over the period while

23 loans to the water resources sector have reduced dramatically. Figure 7 clearly shows this trend. Figure 7: Distribution of Number of Loans Approved, 19852005

10.00 8.00 Number 6.00 4.00 2.00 0.00 19851989 19901994 19951999 20002005
Rural Development Water Resources Agriculture and Natural Resources

Plan Period

55. The value of approved loans to the sector has also reduced over the period, as shown in Figure 8, which shows the value of loans for each five-year period since 1985. There have not been any significant loans to the water resources sector since the approval of the National Drainage Sector Project (NDP) in 1995 and the Second Flood Protection Sector Project in 1997. Until the approval of the Agricultural Sector Program loan in December 2001 there had not been a significant loan for agriculture since 1990. The reduction in lending is a reflection of the disappointing performance of loans made to the sector in the late 1990s, largely resulting from the slow implementation of the NDP and flood sector projects, and the change of emphasis in lending strategy to other sectors, particularly the energy and social infrastructure sectors. In real terms, the decline in the value of approved loans has been even more evident. Figure 8: Distribution of Value of Loans, 19852005

700.00 600.00 500.00 400.00 300.00 200.00 100.00 0.00

$ Million

Rural Development Water Resources Agriculture and Natural Resources

19851989

19901994

19951999 Plan Period

20002005

24 B. Technical Assistance and Other Non-Lending Activities 1. Country-Specific TA

56. Overall for Pakistan, in terms of TA, the ANR sector has received the greatest number of TAs (28%), followed by social infrastructure (21%), finance (9%), energy (11%), transport and communications (10%), industry and non-fuel minerals (5%), and others (13%). In total, the ANR sector has received 77 TAs since 1985 valued at $52.1 million of which 67 are closed and 10 are still active. Of the total, 36 (47%) were advisory TAs,21 and 41 (53%) were project preparatory TAs. The largest number of TA (43%) was for the general agriculture subsector, while the rural development and water resources subsectors received 30% and 27%, respectively. 57. In terms of value, the forestry subsector has received the greatest share (34.4%), largely because of the $15 million TA for the national forestry sector study. The rural development subsector, which has a smaller share in the disbursed loan funds, has been the recipient of a disproportionately higher amount of TA. A breakdown of TAs according to ADBs new sector classification is shown in Table 14. Details of TAs are also included in Appendix 3. Table 14: Breakdown of TA by Category and Amount Number Value ($ million) ADB Subsector Classification of TA Agricultural Production 13 6.7 Environment 3 2.0 Fishery 3 0.9 Forestry 8 17.9 Irrigation 17 7.3 Livestock 4 1.8 Water Resources 7 2.9 Agriculture Sector Development 3 2.3 19 10.2 Multisector (Includes Rural Development Projects) Total 77 52.0
ADB = Asian Development Bank, TA = technical assistance. Source: Asian Development Bank data.

% of Total Value 12.9 3.8 1.7 34.4 14.0 3.5 5.6 4.4 19.6 100.0

58. Table 15 shows the relationship between the number of TAs and the number of loans for each subsector and the ratio of the amount of loans to the value of the TA. Overall, there has been 1.8 TA for each loan with a ratio of 1:1 for the agricultural production subsector to 4 TAs to 1 loan for the forestry and livestock subsectors. The environment subsector has no loans related to the 3 TAs. In terms of the value of the loans related to TA the agricultural production sector has over $1 billion of loans for an expenditure of $6.7 million for TAs, a ratio of 150:1. Next highest is the irrigation sector with a ratio of 133:1. By comparison the forestry, fisheries, and livestock subsectors have the lowest ratios indicating that despite a relatively large investment in TA this has not been associated with a large amount of lending by ADB. These ratios do not necessarily reflect the effectiveness of the TA as there are other important objectives besides the number and value of associated loans to consider, such as capacity, building, institutional strengthening and support for applying international technology and reforms. Advisory TAs are not necessarily designed with the objective of promoting a loan project. In addition, the absorptive capacity of subsectors for the scale of investment funds vary,
21

Formerly called advisory and operational technical assistance (AOTA).

25 and the forestry subsector, which has a high strategic value, has a lower absorptive capacity than the water resources subsector for example. Table 15: Relationship between Technical Assistance and Loans Ratio of Number TA to Number Loans 1.1 0.0 3.0 4.0 1.5 4.0 2.3 0.7 2.4 1.8 Ratio of Value of Loans to TA Value 150 0 12 2 133 13 66 58 35 52

ADB Subsector Classification Agricultural Production Environment Fishery Forestry Irrigation Livestock Water Resources Agriculture Sector Development Multisector Total

Asian Development Bank, TA = technical assistance. Source: Asian Development Bank data.

59. The number of TAs approved per period has steadily decreased as is shown in Figures 9 and 10. In value terms the decline is not so obvious, although the values are in current terms and reflect the need for more funds to compensate for the effects of inflation. The large increase in the allocation to agriculture in 19951999 is because of the $14.145 million advisory TA for the forestry sector project. Figure 9: Distribution of Number Technical Assistance Approved, 19852005

35 30 25 20 15 10 5 0 19851989 19901994 19951999 20002005

Source: Asian Development Bank databases. Agriculture Irrigation/Water Sector Rural Development Total

Number

26 Figure 10: Distribution of Value for Technical Assistance Approved, 19852005

25.0 20.0

$ million

Agriculture Irrigation/Water Sector Rural Development Total

15.0 10.0 5.0 0.0

19851989 19901994 19951999 20002005

Source: Asian Development Bank databases.

60. The distribution of TA between the three subsectors indicates an increased allocation, both in terms of numbers and amounts, to the rural development subsector and a reduction in TA allocated for the water resources subsector. The percentage distribution of TA (advisory and project preparatory) and the amount approved for each 5-year period is shown in Figure 11. The number of project preparatory TAs has reduced in the latter period with only five project preparatory TAs approved in 20002005 compared with 13 in 19851999, confirming the reduced emphasis on the ANR sector. Figure 11: Distribution of Technical Assistance Number and Amount, 19852005

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% AO PP Amt AO PP Amt AO PP Amt AO PP Amt 19851989 19901994 19951999 20002005

Rural Development Irrigation/Water Sector Agriculture

AO = advisory [technical assistance], PP = project preparatory [technical assistance], Amt = amount. Source: Asian Development Bank databases.

27 2. Relevant Regional Technical Assistance

61. During the 20-year evaluation period since 1985, ADB has funded 167 regional TAs in the ANR sector that relate to Asia. Many of these were of direct relevance to Pakistan and many representatives from Pakistan participated in regional activities and received benefit. In total, the regional TAs cost $132 million and were predominantly for agricultural production, agroprocessing, and agribusiness subsectors (32%); and the environment and biodiversity subsector (36%). Table 16 provides a breakdown of regional TA by subsector. The number of regional TA compared with the percentage of value for the subsectors is consistent, except for agriculture sector development which has received 7% of the regional TAs, but which makes up 22% of the value. Table 16: Breakdown of Regional Technical Assistance by Subsector Subsector Number Percent Agriculture Production, Agroprocessing, and Agribusiness 54 32 Agriculture Sector Development 12 7 Environment and Biodiversity 61 36 Fishery 6 4 Forest 18 11 Irrigation and Drainage 5 3 Livestock 3 2 Water Resource Management 8 5 Total 167
Source: Asian Development Bank database.

Value Percent 43.52 33.0 28.64 22.0 31.90 24.0 2.74 2.0 10.19 8.0 0.70 0.5 0.72 0.5 13.73 10.0 132.14

62. The trend in the number and value of RETA in 5-year periods since 1985 is shown in Table 17. This shows a reduction in regional TAs over the period, both in number and value. Table 17: Regional Technical Assistance by 5-Year Period, 19852005 Value ($ million) 5-Year Period Number Percent Percent 19851989 48 29 31.4 24 19901994 51 30 61.5 46 19951999 36 22 15.6 12 20002005 32 19 23.7 18 Total 167 100 132.2 100
Source: Asian Development Bank database.

63. The list of 167 regional TAs applied to the Asia region since 1985 has not been dissected in detail and not all are of relevance to Pakistan, although many of them relate to regional conferences, training courses, workshops, research, and special studies that Pakistan participated in, or was a beneficiary of. Many of the regional TAs relate to support to international and regional research and training institutions, such as the International Water Management Institute, based in Sri Lanka and the International Crop Research Institute for Semi-Arid Tropics in India, both Consultative Group on International Agricultural Research centers. Support for international institutions involved with the ANR sector have no doubt provided many benefits to Pakistan.22
22

A recent study commissioned by the CGIAR Science Council, Standing Panel on Impact Assessment (Raitzer, 2003) analyses the effectiveness of the overall investment in the CGIAR System, and produces evidence of impressive efficiency. The study finds overall benefit-cost ratios could plausibly range from nearly two to over 17,

28 64. An important regional TA was the study on integrated pest management (IPM) in cotton that covered the Peoples Republic of China, India, and Pakistan in 1992. This showed the considerable benefits of IPM in cotton and was influential in the wider adoption of the technology in Pakistan. This type of TA is beneficial in consolidating international experience on the topic and establishing links to international agencies and institutions that can provide technical advice and support. The IPM program in particular has gained much benefit from the international body of knowledge and ADB support served to strengthen the impact. 3. Engagement in Policy Dialogue

65. ADB has maintained close contact with the main government institutions responsible for the ANR sector and is regarded as having influence and credibility for providing advice on policy and reform, for the agriculture and water resources subsectors in particular. ADB has provided supervision and implementation support according to its program, but as is noted in other sections of this report (paras. 80 and 87, the resources available for supervision missions are not always adequate for the requirements of projects and this is a source of continuing frustration for the ADB staff responsible. C. The Influence of Strategy in Program Decisions

66. ADBs program decisions do not indicate the influence of strategy except in the broader sense. Sector allocations are normally made in conjunction with Government at annual programming meetings and there is a rollover from one annual planning period to the next with allocation influenced by past programs. A review of the ADBs country planning documents does not reveal that there is any application of the strategy except as wider statements of intent and the application of ADBs overarching objectives. There is little evidence of the incorporation of the results of past projects except where it is obvious that the project was not successful, like in the livestock sector for example, and need for decentralization for the water resources subsector. Sector allocations are also influenced by historical allocations within ADBs funding allocations and sectoral resources. Allocations are also influenced by international trends in the profile and importance given to sectors and crosscutting issues, such as the emphasis on rural development in the 1970s and 1980s and the later move toward policy-based lending instead of project lending. Poverty reduction gained prominence as the overarching objective in the 1990s and projects were formulated and packaged accordingly, although the underlying objectives had not shifted significantly. More recently there has been a move towards increased participation of the beneficiaries in the planning process with the application of participatory planning method and an emphasis on bottom-up planning. The overall assessment however is, that there has been only a loose influence of strategy on the program decision making and allocation of funding resources within the sector. External factors, such as the imposition of international sanctions and the effect of 9/11 have also influenced the programming and to some extent have prevented strategic considerations from impacting on program decisions, and have overridden the link between strategy and the program. The water resources and agricultural subsectors have maintained a prominent position in ADBs strategy throughout the period, yet the number and value of loans to these subsectors has reduced dramatically since the end of the 1980s.Some of this decline can be explained by the adoption of the strategy for decentralization articulated in CSP Update (20042006) where the ADB was to invest mainly in decentralized and province-focused projects and move away from umbrella type projects covering all
with a plausible scenario of benefits to date producing a ratio of 9 to 1. The latter translates into $69 billion (1990 US Dollars) of benefits over the history of the CGIAR.

29 provinces. Consequently, the pipeline of projects in the water sector currently includes only province-specific projects, the first of which is included for Punjab province in the 2006 program, and which will be followed by other province-specific operations. This decentralized approach does reflect the learning and experience of difficulties encountered in the implementation of umbrella-type projects, so for some sectors there is a demonstrated link between experience, strategy and program. V. ANALYSIS OF PERFORMANCE OF ADBS OPERATIONS

67. This section summarizes ADBs support to the ANR sector on a subsector basis, evaluates the main outputs and outcomes, and makes recommendations for future strategy and support. Historically, ADBs involvement has been varied and extensive, ranging from major irrigation and drainage, livestock, fisheries, forestry, area-based rural development projects, and program loans to support agricultural institutional and policy reforms. In the late 1980s, ADBs support became more focused, compared to the earlier wider support, and concentrated on area specific integrated rural development-type projects. Currently, the focus of assistance is on sector-specific policy reforms to promote freer markets in agricultural inputs and outputs, community-based multi-sectoral area development projects, and rehabilitation of the irrigation infrastructure through both sector and project loans. A. Comparative Sector Performance Rating

68. The comparative analysis of the performance of the ANR sector with other ADBsupported sectors in Pakistan was prepared as part of ADBs Annual Evaluation Review.23 Table 18 shows the comparison based on aggregating ratings for projects approved in the 1970s, 1980s and 1990s (up to 1996). The analysis is based on PPAR ratings, and PCR ratings in the absence of PPAR ratings. It shows that the agriculture sector is midway (58% successful), with transport and communications (89%) and energy (80%) having the highest success, and the finance (25% successful) and social sector operations (26% successful) having the lowest ratings. The overall country average was 50%. Although the performance rating of the agriculture sector operations has declined over the three decades, its relative position has remained about the same. It is acknowledged that this sector rating is simplistic as it does not allow for the structural differences and related design and implementation complexity between sectors. The ANR sector typically has more complex, people-centered projects that require multidisciplinary approaches, compared with infrastructure projects for example. Furthermore the recent performance of the finance sector is more positive (the analysis is only up to 1996) recognizing the improved programmatic approach in the rural/micro finance sector. Table 18: Proportion of Projects Rated Successful by Sector and Approval Period
Sector Transport and Communications Energy Agriculture Finance Social Infrastructure 1970s (% Successful) 0 100 75 20 0 Year of Approval 1980s 19901996 Total (% Successful) (% Successful) (% Successful) 100 100 89 86 40 80 53 50 58 33 0 25 25 38 26

Source: Asian Development Banks internal databases.

23

ADB. 2005. Annual Evaluation Review. Manila. Available: <www.adb.org/evaluation>.

30 B. Rural Development Subsector Performance Assessment 1. Introduction

69. For the purpose of analysis of the sector, ADBs loans have been categorized into three broad categories: (i) rural development; (ii) water resources; and (iii) other, which includes all the projects and loans for the ANR sector that are not included in the first two categories. While there is a degree of overlap in the activities undertaken within the three groups, (for example rural development projects can include small-scale irrigation), there is a difference in loan modality and overall objectives between the three groups as well as the sector agencies. Rural development projects have all been funded from Asian Development Fund (ADF) resources. 70. ADBs support for rural development through rural area development projects (RDPs) began with the Gujranwala Agricultural Development Project (GADP) in 1985 followed by the Chitral Area Development project in 1987.24 Since that time ADB has funded 8 similar RDPs (see Appendix 3 for a complete list). 71. The primary goal of the assistance to the group of projects has been poverty reduction. These projects normally target poor rainfed areas, where a high portion of the population is living in poverty with multi-sectoral development activities being financed. All the projects have used participatory development approaches in one form or another to mobilize local communities to form village organizations and womens organizations and to help prioritize development activities. A major objective has been to reform and support administrative structures and processes to help create sustainable district and village-level institutions that can generate revenues and plan and implement development activities. Various models for community mobilization and implementation of development activities have been applied, including the use of rural support programs, national NGOs, local NGOs, and line agencies. 72. The evaluation team visited two ongoing RDPsMarlakand Rural Development Project (MRDP)25 and the Second Barani Area Development Project in NWFP (SBADP)26 and held discussions with project staff and stakeholders including service providers, consultants, and beneficiaries. Prior to field visits discussions were held with the concerned project implementation officer (PIO) at the Pakistan Resident Mission (PRM) in Islamabad. Separate meetings were also held with the PIO for Sindh Rural Development Project (SRDP),27 and the team leader of the Sindh Coastal and Inland Communities Development Project mission.28 A thorough review of the available documentation and reports including the recent ADB

24

ADB. 1985. Report and Recommendation of the President on a Proposed Loan to the Islamic Republic of Pakistan for the Gujranwala Agricultural Development Project (Loan 0734). Manila; ADB. 1987. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the Islamic Republic of Pakistan for the Chitral Area Development Project (Loan No. 838-PAK [SF]/209-[IFAD], for $39.129 million cofinanced with IFAD). Manila. 25 ADB. 1999. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the Islamic Republic of Pakistan for the Malakand Rural Development Project (Loan 1672). Manila. 26 ADB. 2000. Report and Recommendation of the President on a Proposed Loan to the Islamic Republic of Pakistan for the North-West Frontier Province Barani Area Development Project, Phase II (Loan 1787). 27 ADB. 2002. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the Islamic Republic of Pakistan for the Sindh Rural Development Project (Loan 1934). Manila. 28 ADB. 2004. Technical Assistance to the Islamic Republic of Pakistan for Preparing the Sindh Coastal and Inland Community Development Project (TA 4525). Manila.

31 publications complemented the field work.29 In total, net loans of $372 million have been provided by ADB, funded from ADF sources. 73. Of the 10 projects, 4 have been completed and subjected to an ex-post evaluation, the other 6 are ongoing. The two most recent projects have not been evaluated in this exercise. The details are shown in Table 19. Their performance assessment ranges from generally successful to partly successful.30 Implementation of the latest RD project, Sindh Rural Development Project started in 2005 and in August 2005 the project preparatory TA for the Sindh Coastal and Inland Community Development Project started. Overall, the evaluation teams rating for this group of projects is partly successful. 2. Performance Assessment Table 19: Performance Assessment of Rural Development Projects
Project Gujranwala Agricultural Development Project (1985-1994) Chitral Area Development Project (19871997) Second Barani Area Development Project (19901998) NWFP Barani Area Development Project (19922001) Malakand Rural Development Project (1996ongoing) Bahawalpur Rural Development Project (1996ongoing) Dera Ghazi Khan Rural Development Project (1996ongoing) NWFP Barani Area Development Project (II) (2000ongoing) Sindh Rural Development Project (2002ongoing) Sustainable Livelihoods in Barani Areas Punjab (2004ongoing) PCR Rating Generally Successful Generally Successful Successful PPAR Rating Partly Successful Partly Successful SAPE Rating Partly Successful Successful Partly Successful Partly Successful Partly Successful Successful Successful Successful

PCR = project completion report; PPAR = project performance audit report; SAPE = sector assistance program evaluation; = not yet evaluated. Source: Asian Development Bank PCR and PPAR documents and ratings by sector evaluation consultants.

74. The 10 RD projects were evaluated using the main evaluation criteria based on evaluation documents and the evaluation teams assessment of their design and performance using OEDs methodology.31 The distribution of ratings by the main evaluation criteria shows a clustering of ratings around a score of 2 (on a scale of 03) for relevance and institutional development/other impacts, and a score of 1 for efficacy, efficiency, and sustainabilityless effective, less efficient, and less sustainable, respectively (Table 20). All projects were relevant, but had issues of sustainabilitywith respect to institutional, financial, and infrastructure components. Institutional development/other impacts were important and rank relatively high in the evaluation.
29

The recent ADB special evaluation study SST: REG 2005-01 Effectiveness of Participatory Approaches: Do the New Approaches Offer an Effective Solution to the Conventional Problems in Rural Development Projects?, Dec. 2004 was useful in confirming the issues of slow startup concerning rural development projects in Pakistan. [The study did a lot more than just confirm this.] 30 In 1999, OED changed its rating system from a three-category system (generally successful, partly successful, or unsuccessful) to one with four categories (highly successful, successful, partly successful, or unsuccessful). 31 Available: <www.adb.org/evaluation>.

32 Table 20: Frequency of Scores by Main Criteria for Rural Development Sector Projects Scorea Criteria 3 2 1 0 Relevance 2 6 2 0 Efficacy 0 5 5 0 Efficiency 0 2 8 0 Sustainability 0 2 8 0 Institutional Development/Other Impacts 0 6 4 0
a

Score of 3 = highly relevant, 2 = relevant, 1 = partly relevant, and 0 = irrelevant. Source: Consultants estimates.

3.

Conclusions

75. The circumstances of each project are different (in terms of physical area, beneficiaries, management approach, etc.), but invariably there has been delays in the project start-up through (i) delays in approval of PC1s and PC2s,32 availability of counterpart funds, and the recruitment and appointment of project staff; (ii) delay in setting up of project management units (PMUs), project coordination units (PCUs); and project implementation units (PIUs); and (iii) in procurement of materials that resulted in slow performance during the first 1 to 2 years of project implementation. These delays can be largely attributed to the cumbersome bureaucratic processes involved in the selection and appointment of national staff, and on occasion political interference in the appointment process. These delays contributed to lower outcomes and consequently lower project economic performance than what was originally envisaged in the appraisal documents. This problem was recognized by ADB and as an alternative to the appointment of government staff the recruitment of non-civil servants for the project director with an attractive salary package was tried for Bahawalpur and DG Khan RDPs in the late 1990s. However, this experiment did not result in faster appointment and the appointee later faced resistance and obstruction from the administration during implementation of the projects. The use of a project preparation facility and special start-up TA to assist in project launch and to shorten this process is advisable. For example, the recent Agribusiness Development Project (ADP)33 has a provision for special TA to assist in the start-up process, which appears to have been very successful so far in kick-starting the project. 76. In some cases the process of community mobilization for the formulation of village organizations and womens organizations was fast-tracked and compressed to meet the physical targets, driven by the need to achieve the disbursement targets and outputs. This was observed in the case of the MRDP where the Government was said to be more interested in implementing schemes and disbursing funds at the expense of keeping to the longer schedule needed for the process of community mobilization. This has had the result that the participation of the local community was compromised and the development activities do not necessarily represent the needs and desires of the local population and, more importantly, have their full commitment. 77. Furthermore, the community mobilization process did not encompass all the beneficiary groups and often excluded marginalized and vulnerable people who are the intended beneficiaries with the higher incidence of poverty. This aspect was particularly observed in NWFP, particularly in MRDP, where traditional tribal leaders (maliks) dominate the consultation
32

The PC1 is the Government Planning Commissions Proforma No. 1, which is equivalent to ADBs RRP. The PC2 is equivalent to a feasibility report. 33 ADB. 2005. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the Islamic Republic of Pakistan for the Agribusiness Development Project (Loan 2171). Manila.

33 process and sideline the less influential people. It is interesting to note that the PPAR for the Second Barani Area Development Project noted that "a significant amount of the benefits were captured by a small number of large landowners. 78. There are serious issues about the long-term sustainability of the infrastructure that has been developed and the capability of the community to operate and maintain it. This aspect is more serious for infrastructure that is the Governments responsibility for ongoing O&M, compared with infrastructure like small-scale community irrigation schemes and village water supply facilities that are the responsibility of the community and where there is likely to be more ownership and commitment. 79. The performance of the impact monitoring system (monitoring and evaluation [M&E]) has not achieved its purpose and does not provide sufficient information to allow proper evaluation of the outcomes. Benchmark studies required to be done at the initiation of the project were often not implemented until the project was well into implementation period, and routine M&E of the project impact and outcomes not done in a timely and systematic manner. Project staff expressed their view to the evaluation team that the Government generally does not perceive M&E a high priority, and it is regarded as a requirement that is imposed by the funding agency. M&E costs are Box 1: Effectiveness of Participatory Approaches comparatively high for rural development projects due to the non-availability of Do the New Approaches Offer an Effective Solution to the Conventional Problems in Rural Development Projects? existing statistics and the large often (ADB Special Evaluation Study SST 2005-01) fragmented project areas. Because the projects are usually one-off projects, the IA This ADB study analysed a sample of rural development is said to have less incentive for costly projects to find out if the new participatory approaches M&E when there is no opportunity to apply offer an effective solution to conventional problems of the need to enhance the sense of ownership among the lessons to follow on projects. In some beneficiaries and governments and for greater beneficiary cases it was said that the IA does not want participation in all aspects of the project cycle. The study rigorous M&E and prefers information on concluded that there was evidence that the participatory project impact to be kept vague so that approaches improved information flows and created new delivery mechanism. However in the case of intensive interference in the allocation of funding for consultation, there was no evidence that the increased activities, favoritism in selection of participation empowered beneficiaries in resource control participants and poor performance are not and decision making, nor did it give them authority to hold exposed for criticism. This indicates that providers accountable, enhance their ownership, or there is a general lack of appreciation and motivate them to take care of project facilities that were formally transferred to them. In particular, inadequate understanding of the reasons and utility of maintenance of project facilities (such as rural roads and M&E as a part of project management and irrigation systems) remained widespread, leading to poor the need for the institutionalizing of M&E in sustainability of project benefits. the IAs functions. 80. The performance of NGOs and consultants hired for the delivery of services community development, surveys studies, capacity building, M&E, etc., has not always met expectations. This is partly a reflection of the more complicated management required for a multi-sectoral development project in locations where there is limited local implementation and administrative capacity. In MRDP, an objective was to build the capacity of the local NGOs through their involvement in the project as part of institutional strengthening and capacity building with coordination, training, and guidance provided by a more experienced umbrella NGO. Understandably, the NGOs will take time to develop experience and capacity. Discussion with project management and NGOs highlighted issues of a lack of accountability and mediocre performance and a breakdown in communications between project management and the NGOs. The umbrella NGO tasked with providing training and support to the smaller implementing

34 NGOs had not fulfilled its duties. These issues have been raised by PRM and concerned staff but do not appear to have been resolved. 81. Furthermore, the supervision and management of RD projects by ADB is less than necessary, both in terms of frequency and depth, and more concerned with the administrative and financial issues rather than technical or development issues. The PMU staff felt that ADB is also slow in responding to the requests, particularly when projects were managed from Manila. Although even when projects are managed from the PRM, supervision and management is not considered adequate to effectively deal with the technical requirements of the project. This is primarily because of the lack of resources available in PRM and ADB for supervision and field visits. Of necessity priority is given to essential administrative and financial issues. But it is also noteworthy that the PRM does not have any in-house rural development or agricultural specialists on its staff to support its projects. Considering the importance of RD projects in Pakistan this is surprising. 82. The model that has been applied for rural development and poverty reduction in the targeted disadvantaged areas does not appear to pay sufficient attention to the complexity of the economy in these areas and the forward and backward linkages to other sectors of the country. Because rainfed areas usually have a poor resource endowment with unpredictable agricultural performance, as a risk management mechanism families often rely on other sources of non-agricultural income including remittances from outside work, both in-country and overseas. The importance of off-farm income and the role of migrant work in the livelihoods of families have not been sufficiently recognized. The role of projects in helping residents to enhance their skills for migrant work has not been adequately considered. For many families the most important economic activity is for a family member to migrate for wage employment in the urban sector, or further afield in the Middle East. In this respect, rural development project designs should also include increasing employment opportunities for the beneficiaries through improving their skills and knowledge for gaining such employmentby providing vocational and technical training and other forms of assistance for those seeking off-farm employment. It is interesting to note that the PPAR for the SBADP project comments that the project did not fulfill its objective of reducing migration to the cities. It could be argued, that on the contrary, the project should have been assisting the local people to migrate to the cities and through their remittances increase household income and reduce poverty. These areas are poor for good reason and maybe the biggest potential to reduce their poverty is to help people earn income from non-farm activities within the village or elsewhere. There is also a useful modernizing influence in exposing migrants to a broader environment that can help break down restrictive local attitudes when they and their children return.34 Although it can be argued that support to skill enhancement to increase migratory employment prospects is the purview of the education sector, and not part of an area development project, the evaluation team consider that it is logical to include this aspect as part of rural development, particularly if it is a priority expressed by the recipient community and the means by which they can improve their livelihood. 4. Outcomes

83. In terms of economic impact the ADB-funded rural development projects have not achieved their objectives. For example, the PPAR for GADP reestimated the economic internatl
34

The ongoing special evaluation study on poverty exit and ADB projects targeting poverty in Vietnam concluded that for permanent exit from poverty, migration of the second generation to non-agriculture sectors outside the rural areas seems to be necessary, given the severe shortage of farmland, a large amount of surplus labor, and limited off-farm employment in the rural areas.

35 rate of return (EIRR) at 7% compared with 27% at appraisal and 17% in the PCR, and the expost EIRR for SBADP in Punjab is recalculated at 4.1% compared to 24.0% at appraisal. Generally speaking, the reduction of poverty has been less than envisaged, as disbursement and achievements were less than planned and the failure of projects to fully include marginalized people has reduced the impact on the target population. The failure to implement the credit component in MRDP and NWFP SBARDP, and the poor effectiveness of training has had the result that the impact on agricultural production and poverty reduction is less than predicted at project formulation. 84. A rural development project is not a comprehensive integrated action plan for the district (for example they do not include health and education activities which may be funded by other programs) and in this respect they may not necessarily reflect all the integrated and prioritized development needs of the area. The recent paper produced by ADBs Economics and Research Department on suggestions for improving the relevance and feasibility of agriculture and rural development project design is also highly relevant to this topic.35 This paper comments that the lackluster performance of agriculture and rural regions shows in the mixed results of donor assisted projects, including projects funded by ADB. Although the methods used to address the development issues have changed and evolved over time, they still have underperformed compared to expectations. An important reason for this is that generally there has not been a sufficiently detailed analysis of the sector as a prerequisite to project design and the use of economic appraisal in project design has not been as useful as it could be through a lack of credible information, (and also time). The paper concludes that to be effective, a projects economic appraisal must be preceded by analysis of the sector and subsector issues, the stakeholders and regions to be targeted, how they interact with the broader economy and constraints to efficient input-output transformation and market transactions. The need for a comprehensive up-front sector analysis is highlighted as part of the planning process to help prioritize sector development needs and design feasible approaches. Overly complex project design should be avoided. M&E is also an ongoing part of the ongoing diagnostic cycle of response and outcome during implementation as a means to help managers and stakeholders make informed decisions and adjust activities in the light of experience as a tool of management and to improve institutional capacity. 85. More importance should be given to a projects fiscal impact, especially for public goods development such as rural roads, extension services, etc., that have no, or partial, revenue generation. Although analysis of the fiscal impact is recognized in ADBs procedures as being needed for a projects financial and economic evaluation, it is not usually done thoroughly or given as much attention as it should, which has implications for the sustainability of the activities and infrastructure developed by the project. Sector analysis and diagnostic should be part of an ongoing operation to provide support for project design and preparation and implementation. 5. Recommendations

86. The devolution of responsibility under the recent reforms to the district level has major implications for the implementation of rural development programs such as ADB has funded in the past. It is most important that development programs should be firmly rooted within the district administration and activity mainstreamed within the district planning administration rather

35

R. Bolt. September 2005. Improving the Relevance and Feasibility of Agriculture and Rural Development Operational Designs: How Economic Analyses Can Help. ERD Technical Note No. 12. Manila: ADB.

36 than through a separate stand-alone PMU/PCU or PIU as in the current model.36 The objective should be to standardize the process for all districts for development funded by all sources international, national, and bilateral financing agenciesand projects should include wider sectoral development options including health and education activities and human resources development that relate to the overall district development plans and established need. Future ADB assistance for the rural development could be provided through a rural development fund (RDF) that is accessible by local self government institutions including district governments, and the Union Councils (UCs). Districts that had identified their needs appropriately and which have the capacity to prepare proposals could access financial and technical support from the proposed RDF through the district governments. This would mean that the current model for stand-alone piecemeal rural development would no longer be applied. In this respect, the National Reconstruction Bureau has recently listed several prerequisites for donor devolution, integrity compliance, acceptable institutions, and a donor coordination and devolution framework (Box 2) including an adamant confirmation that devolution to local government is regarded as part and parcel of rural development. While these points may appear extreme and in some aspects dubious, they do portray the current view and political scene. Anecdotal evidence indicates that more successful outcomes have been achieved where home grown initiatives have been supported. 87. The formation of village and Box 2: womens organizations and the In a presentation to the Pakistan Development Forum 2005, implementation of schemes and the National Reconstruction Bureau (NRB) made the point that Devolution to local government is rural development. subprojects should not be so time bound NRB further stated that or target driven, but relate to proposals prepared by district planners. It should pre-devolution arrangements for rural development follow the prescribed community continue through various state and non-state actors; mobilization approach to ensure the devolution to local governments was implemented precisely to deliver rural developmentpre-devolution durability of the village organizations and hangover attempts to separate devolution from rural their subsequent ownership and development; commitment to projects developed for parallel systems of pre-devolution vintage undermine their benefit. The main objective would be and undercut the consolidation of devolution, and to strengthen the ability of UCs to parallel systems suffer from lack of accountability, transparency, revenue responsibility, democratic function as the means for community leadership, efficiency of overheads, sustainability and preference expression and community can never replace government systems. control of development programs. The application of a RDF model may not be the most appropriate approach in all situations and will require more investigation and refinement before being adopted. This is one aspect that could be examined in the suggested review of rural development projects in Pakistan. DFID and other financiers are said to be also interested is sharing the lessons and experience and identifying more effective approaches in providing support for poor communities. It is beyond the scope of this evaluation to prepare a deeper analysis of the RDF model but it would be worthwhile to assess the performance of the National Rural Support Program and similar provincial programs taking a RDF approach with government endowment funds combined with leveraged finance from banks. The World Bank supported Pakistan Poverty Alleviation Fund which primarily on-lends to NGOs could also provide useful lessons on their relative performance. Issues concerned with potential capture of a disproportionate share of funds by more developed and favored districts and the capacity constraints for project implementation at the local level would need to be addressed to ensure
36

A district-based development model has been used for the Sustainable Livelihoods for Barani Areas in Punjab project, and projects funded by other funding agencies.

37 that the poorest areas with the greatest need for poverty alleviation are not excluded. Pro-poor intervention would have to be balanced with economic viability and sustainability. The RDF model would require more attention and support for capacity building of district staff and strengthening of the existing district planning and implementation capacity. 88. ADBs management and supervision capability should be strengthened to provide more frequent supervision and increase the availability of technical expertise to assist projects as and when required. Access to discretionary funds for the use of the project officer has been suggested as one means of providing more flexibility for management and supervision (the discretionary funds could be used to hire in particular expertise, or conduct special studies on a particular aspect of a project). However, this alone will not solve the problem, which is rooted in ADBs institutional arrangements and business processes. One option would be to fund fewer, but larger projects with a longer time commitment to reduce the time spent processing projects, thereby releasing time for more support and supervision. There is a need to use country systems more and for ADB to get out of the routine supervision of consultant recruitment and procurement. 89. Support for the application of the M&E function by EAs from a provincial level or central level agency, should be investigated and supported if considered feasible. Although districtbased agencies will have responsibility of M&E, there is a need to provide more support for undertaking M&E through developing standardized packages for surveys, analysis, staff training, and the application of best practice based on the collective experience gained on completed and ongoing projects. More effective and timely M&E would also demonstrate to Government the usefulness and benefits of M&E as a tool of management and help institutionalize its function. C. Water Resources/Infrastructure Performance Assessment 1. Introduction

90. The Indus Basin canal irrigation system commanding 80% of the countrys 18.6 million ha irrigated lands is the largest contiguous gravity flow irrigation system in the world with a long history of development originating in the days of bygone Indus civilizations. Major development started under colonial rule in the later part of the 19th century with the construction of improved flood escape and drainage canals which were gradually converted into a regulated system by means of weirs and barrages on the major rivers. Development of water resources in the Indus Basin for irrigated agriculture has been a key source of agricultural and economic growth. In addition, the system as a primary source of rural, municipal, and industrial water supply expels untreated waste and generates hydropower. Nevertheless, 95% of the developed water supply is used for irrigation. 91. Pakistan has serious issues with its water resources sector and action is needed to solve the problems and lay the foundation to meet future needs for water resources management, maintenance and development. The key issues as noted in the MTDF are (i) (ii) (iii) (iv) (v) (vi) absence of a holistic, integrated, and sustained approach to water management; sub-optimal used and low productivity of water; inadequate storage capacity with escapes to the sea; extensive seepage losses in the irrigation system; inadequate O&M and poor cost recovery; excessive groundwater extraction without recharge;

38 (vii) (viii) (ix) (x) (xi) (xii) (xiii) absence of measures for rainfall harvesting; unsafe disposal of drainage effluent to the sea; inadequate protection of infrastructure from floods; lack of private sector participation; deteriorating capacity of key water sector institutions; increased poverty on backward irrigated areas; and poor linkage among water, agriculture, and rural development projects and related research.

92. Currently, no agency has a clear mandate to direct overall water sector planning and integrate the management and development activities of the various water-related institutions. Institutional arrangements for planning are fragmented among various federal and provincial bodies and among different water subsectors. Major investment in infrastructure in the water subsector, primarily in irrigation, but also for hydropower generation, is regarded as being necessary to sustain higher economic growth. The total worth of all the assets in the irrigation and water management sector are said to be in the order of $300 billion, which means that the annual maintenance costs are huge. (At a maintenance requirement of 0.5% of the capital value per year this represents an amount of $1.5 billion per year.) Although this is an indication of the maintenance requirements and is not a reliable indicator of the capital investment needs for the sector, when compared with the current allocation by Government of about PRs2 billion, ($33 million) per year, it does indicate a shortfall in funding, and the considerable investment needs of the sector. 93. Significant external assistance has been provided to the water subsector, in which ADB has a long lending history, with over $1.5 billion invested in projects for irrigation, drainage, tube wells, watershed management, and flood protection. However, ADBs investment in water resources and irrigated agriculture has waned since the 1990s because of poor performance in project implementation, concerns over projects' ability to achieve ADB's development objectives and the weak progress with reforms for the transition of irrigation management to area water boards and water users. 2. Performance Assessment

94. ADB has funded 17 significant loan projects for the water resources sector since 1985. Four of the projects are ongoing. Of those that have been completed, 11 have a PCR rating of which 3 (27%) are rated as partly successful, and 8 (72%) rated as successful, including those rated as generally successful (Table 21). Three projects have a PPAR rating, which are all successful. One project, the Chashma Right Bank Irrigation Project Stage III (Loan 0874)37 has been subjected to the ADB inspection panel, but does not have an evaluation rating. This project has been rated as successful by the evaluation team. Notwithstanding the negative connotations from the inspection report, the project has produced considerable economic benefits from irrigation in the wider command area. Overall, ADBs program for the water resources category is assessed as successful.

37

ADB. 1987. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the Islamic Republic of Pakistan for the Chashma Right Bank Irrigation Project (Stage III). Manila.

39 Table 21: Performance Assessment of Water Resources Sector Projects

Project 0750 Small Dams Project (19851996) PCR Rating PPAR Rating SAPE Rating Partly Successful Successful Successful Successful Successful Partly Successful Partly Successful Successful Successful Successful Successful Successful Successful Successful Successful Successful Successful Successful Successful Partly Successful Partly Successful

0722 Pat Feeder Canal Rehabilitation & Improvement Partly Successful Project (19852000) 0800 Balochistan Groundwater and Trickle Irrigation Partly Successful (19861996) 0871 Second On-Farm Water Management Project Successful (19871995) 0837 Flood Protection Sector Project (19871999) Generally Successful 0874 Chashma Right Bank Irrigation Project Stage (II) Generally (19871995) Successful 0901 Khushab Salinity Control & Reclamation Project Generally (19881999) Successful 0976 Swabi Salinity Control & reclamation Project Successful (19892000) 0957 Flood Damage Restoration Project (19891993) 1101 Kotri Barrage Rehabilitation Project (19912000) 1146 Chashma Right Bank Irrigation Project (Stage III) (19912005) 1209 Flood Damage Restoration (Sector) Project (19921999) 1924 Pehur High-Level Canal Project (1993ongoing) 1297 3rd Punjab OFWM Project (19942002) 1350 Marala Ravi Link Canal System (19941998) 1413 National Drainage Sector Project (1995-ongoing) 1578 Second Flood Protection Sector (1997-ongoing) Successful Generally Successful Successful

PCR = project completion report; PPAR = project performance audit report; SAPE = sector assistance program evaluation; = not yet evaluated. Source: Asian Development Bank PCR and PPAR documents and ratings by sector consultants.

95. The 17 projects were evaluated using the main evaluation criteria based on evaluation documents and the consultants assessment of their design and performance. The evaluation team ranks 13 of the projects as successful, and 4 as partly successful. The distribution of ratings by the main evaluation criteria shows that most were highly relevant, were clustering around a ratings score of 2 (on a scale of 03) for effectiveness and efficiency, but scored low (less likely) for sustainability. (For the reason that the commitment and security of funds for O&M is not assured and irrigation reform is not established). Most also scored institutional development/other impacts of 2, indicating the relatively high impact in this respect. Table 22 summarizes the information. Comments on significant projects reviewed by the evaluation team are presented in the following sections.

40 Table 22: Frequency of Scores by Main Criteria for Water Resources Sector Projects
Scorea Criteria Relevance Efficacy/Effectiveness Efficiency Sustainability Institutional Development/Other Impacts
a

3 12 1 0 0 2

2 6 10 12 5 12

1 0 7 6 13 4

0 0 0 0 0 0

Score of: 3 = highly relevant, 2 = relevant, 1 = partly relevant, and 0 = irrelevant. Source: Consultants estimates.

3.

National Drainage Sector Project

96. In 1995, the Government approved the National Drainage Program, with the main objective to restore the sustainability of irrigated agriculture by evacuating drainage surplus to evaporation ponds and the sea. The program was designed as a multi-phased and multi-funding agency investment package over a 25-year time period integrating structural as well as institutional components. The long timeframe is consistent with the approach being advocated by this study for future ANR operations in Pakistan. It was intended that the program would assist the Federal Government and the four provinces to (i) establish the policy environment and institutional framework to introduce the first phase of policy and institutional reforms related to the water sector, (ii) strengthen irrigation and drainage research and sector planning capabilities, and (iii) to prepare and finance selected investments in drainage and irrigation infrastructure. 97. In 1995, ADB approved Loan 1413, the National Drainage Sector Project (NDP),38 a $735 million project cofinanced by ADB ($185 million), Japan Bank for International Cooperation (JBIC), and the World Bank. The main executing agency is the Ministry of Water and Power and the provincial agencies concerned with the water sector. The objective of this project was to assist the government in implementing its national drainage program. The World Bank was primarily responsible for funding the institutional reform aspects while the ADB and JBIC funded physical investment, which were conditional on first completing the reforms. Creation of independent PIDAs and transferring the authority for irrigation management at the system and distributory level from Government to area water boards and farmers organizations was one of the conditions of the institutional reforms component. 98. Implementation of the NDP began in 1997 and it soon became apparent that the Governments will and ability to implement the proposed reforms lacked full commitment and ownership and the institutional reform component stalled. Implementation was affected by changes in government and the change from civilian to military rule during the initial years of implementation which affected the continuity and commitment to the reform. The task was greater than anticipated. The Government was not opposed to the reforms, which are accepted as being fundamental to the restructuring of the water resources, it just that there are political and bureaucratic impediments to the reform by vested interests at the provincial level. This situation culminated in the World Bank pulling out of the project in early 2005 when the original loan closing date was reached. The World Banks position is that they had disbursed all their funds and as it was a poorly performing project that had no case to request their board to allocate further funding. (Although not explicitly stated, the ongoing inspection of the World
38

ADB. 1995. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the Islamic Republic of Pakistan for the National Drainage Sector Project. Manila.

41 Bank-funded Left Bank Outfall Drain project may have also influenced this decision). Meanwhile ADB and JBIC disbursements were behind schedule because of the linkage to the reforms. The ADB has extended its loan and provided support to meet gaps caused by the World Banks exit. 99. The ADB and World Bank staff at the respective resident missions in Pakistan consider that with the benefit of hindsight, the project was too ambitious and that the required reforms were not achievable in the timeframe and political environment at the time. It is also noted the Government agreed to the loan and its conditions at a time when the country had a severe shortage of foreign exchange, and in their enthusiasm for signing for the loan they accepted the reform covenants without being fully committed to, or aware of the size of, the task required for the implementation of the reforms. 100. The current situation with respect to the implementation of the reforms is that Sindh province has adopted the proposed reform measures province-wide and has enacted the reforms by changing the ordinance and has proceeded with the establishment of area water boards on all the canal systems in the province and the phased formation of farmer organizations. However transition progress has been slow due to resistance from PIDAs who feel threatened by the loss of their responsibility and power with the transfer to farmer organizations. It was mentioned that in the 4 years since the Sindh Irrigation and Drainage Authority was formed, about 10 managing directors were appointed and changed. On the other hand, in Punjab province a pilot approach has been adopted with one area water board formed on the Lower China Canal system to evaluate the feasibility of the introduction of participatory irrigation management on a pilot basis before province-wide adoption. What is clear is that much more work and support is need before the planned devolution of irrigation management becomes fully established and functioning. 101. One of the lessons from the experience with NDP is the vulnerable position ADB was left in following the decision by the World Bank, the main confinancier, not to finance a second stage of the project. This left the ADB in a vulnerable position as the necessary reformation being undertaken by the World Bank, which was a precondition of the ADBs components, had not been completed leaving unfinished business. The problem was not the cofinancing arrangements, rather the situation where the approval of an investment project required reforms to be done as a precondition for implementation, and for its success. Even with the benefit of hindsight it is difficult to comment on how ADB could more effectively participate in projects cofinanced with other financing agencies where the implementation of ADB-funded components are dependent on the outcome of institutional reforms funded by other financing agencies. There is an inherent measure of good faith in such arrangements. It can be observed that for simplicity ADB should restrict its funding for rehabilitation to parts of the irrigation system where essential reforms have been implemented and are functioning and where possible link assistance to a discreet canal or distributory system to simplify supervision and management. 102. The ADB TA completed in 2002 supporting development of a National Water Sector Strategy (WSS) helped the Government realize that existing piecemeal institutional arrangements and lack of capacity for strategic planning and policy analysis are no longer adequate and need to be restructured and strengthened. Additional capacity is needed to implement the draft National Water Policy, which is under Government review. This complements the WSS, and was developed in response to water sector challenges. The water sector strategy and national water policy call for an apex body or supporting secretariat to provide enhanced analytical support to strategic planning in the water resources sector.

42 103. ADB has recently approved a new TA39 to assist the development of the water resources sector with the overall goal: Improved capacity for policy analysis and strategic planning and a more effective institutional framework for integrated water resources management (IWRM). This TA is expected to firmly reestablish ADBs engagement with the sector and set the path for a continuing involvement and support to what is the most economically significant natural resource sector in Pakistan. 104. Recommendation. ADB has had a long involvement with providing assistance to the water resources sector through TA and loans, although in more recent years the level of assistance has lessened as a reaction to poor performance and lack of progress by government, a not unreasonable response by ADB. However, there is recognition that the irrigation sector is the backbone of the country and that there is a continuing need for investment and support for rehabilitation and to complete the reform process. The completed TA to support the development of a water sector strategy40 which provided an outline plan for continuing reform for the irrigation sector, for water resources and management and a medium term investment plan serves as a blueprint for the ADB to maintain its presence and dialogue with the sector as part of a commitment to a long term strategy of support. 4. Flood Protection

105. ADB has provided considerable assistance for flood protection over the review period, the most recent being the Second Flood Protection Project 1996, which recently had its closing date extended. This project is the last in a series of projects that have provided to support this sector, with a variable level of success.41 Major floods occurred in 1988, 1992, and 1994 and in response ADB provided emergency loans to support the government's flood damage restoration programs. In addition, as a result of the 1992 and 1994 floods adjustments were made in the scope of the First Flood Protection Sector Project. 106. The First Flood Protection Sector Project included a detailed design for several core projects and the provision for the preparation of other subprojects during the course of implementation. One component was to support a flood forecasting and warning system and there was provision for institutional strengthening and capacity building. 107. The PCR prepared for the First Flood Protection Project in December 1998 rated the project as generally successful and concluded that the project had demonstrated that the sector approach was appropriate for the implementation of the flood protection works. It did however note that in some cases political and personal considerations influence in the prioritization and selection process, resulting in the execution of several schemes that have provided a disproportional share of the benefits to a limited number of beneficiaries. This criticism has also been leveled at the most recent flood protection project. Delays in the appointment of consultants delayed the start-up of the project, and in addition the performance of the
39

ADB. 2004. Technical Assistance to the Islamic Republic of Pakistan for the Water Sector Irrigation Development. Manila. 40 ADB. 2002. Technical Assistance to the Islamic Republic of Pakistan for the Water Sector Strategy Study (TA 3130, closed December 2002). Manila. 41 ADB. 1987. Report and Recommendation of the President on a Proposed Loan to the Islamic Republic of Pakistan for the Flood Protection Sector Project (Loan 0837, approved on 25 April 1987 for $115 million). Manila; ADB. 1989. Report and Recommendation of the President to the Islamic Republic of Pakistan for the Flood Damage Restoration Project) Loan 957, approved on 30 March 1989 for $44 million). Manila; and ADB. 1992. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the Islamic Republic of Pakistan for the Flood Damage Restoration (Sector) Project (Loan 1209, approved on 15 December 1992 for $100 million). Manila.

43 consultants responsible for the implementation of some projects was regarded as unsatisfactory. There are also problems where works were carried out by local contractors. 108. The revaluation of the economic returns indicated that most of the physical flood protection projects had an EIRR of 10% or higher and in addition there were considerable additional economic benefits arising from the investment in flood forecasting and warning systems. Traditional social benefits were also significant. However, issues with sustainability were noted which needed to be addressed through policy measures. 109. The Second Flood Sector Project became effective on 1 October 1999, after having been put on hold for three years, after the Governments decision to review all mega projects and re-estimate costs, which resulted in some components being downsized. Consequently project implementation is behind schedule and currently is 50% after two years implementation. Project management is weak; there were delays in appointing project staff and the ADB requested changes to project personnel. The M&E function has not been done as designed. The problems with delay in implementation have more recently been overcome to a large extent. Although there has been a delay in the construction of sub-projects, their location and the performance of contractors is not regarded as being an issue, and a high quality of civil works has been achieved through close supervision by consultants supported by ADBs periodic reviews. 110. One of the major issues is that the Ministry of Water and Power is not an implementing agency: its role is to provide the funding, technical advice, and interprovincial coordination. The actual implementation of the works in the responsibility of the provincial agencies. Their performance has not been satisfactory with instances of corruption and malfeasance in the application of project funds, exacerbated by the number of relatively small sub-projects and numerous contractors involved. 111. Conclusion. The PCR/PPAR rated the performance of the ADB-funded projects in the flood sector as satisfactory but with a qualifier that this was obtained despite political interference with respect to location of the schemes, which suggests that their efficiency and effectiveness were undermined by this interference. This has also been influenced by the nature of the works and the structure of the projects with many small projects designed and implemented by local contractors. Moreover the nature of flood protection works with the need for emergency and restorative works to be built quickly to alleviate a problem area can lead to hasty design and implementation where the proper planning, supervision and controls are not applied so rigorously. Emergency flood protection works do not go through the normal feasibility study process. This creates a situation where the opportunities for corruption and substandard works are increased, especially when works are carried out by the provincial agencies with limited institutional capacity. It is clear that support is needed for building project management and implementation capacity at the provincial level. 112. The investment requirement for the flood protection sector is continuous and a never ending process as there is a need for new protective works and repair after every big flood. The investment needs of the water sector are big; what the Government is contemplating would be a better flood management plan to define strategy, priorities, and funding needs. It is recognized that there needs to be an element of cost recovery in the works to contribute to long term sustainability. It was suggested to the evaluation team that a third flood sector project would require funding of $250 million, but of course this would require further study and would depend on the outcome of the present project.

44 113. Recommendation. While it is recognized that there is a considerable ongoing need for capital investment in flood protection and restorative works, the same risks will still apply, especially where the funding is used for more hastily prepared projects. ADB assistance should be focused on high priority flood protection structures, nonstructural measures (such as flood early warning systems, floodplain zoning etc.) and institutional strengthening clearly defined under a flood management strategy and programs, which should provide cost-effective, affordable, and sustainable means to manage the countrys flood problems. Interventions on a piecemeal and ad hoc approach as applied in the earlier flood protection projects should be avoided. 5. Small Dams Development

114. ADB funded the construction of new dams under the Small Dams Project from 1986 to 1996.42 The objective of the project was to increase agricultural production and employment in the Potwar plateau of Punjab province with the main IA the Small Dams Organization of the Punjab Department of Irrigation and Power supported by Punjab Department of Agriculture, Punjab Department of Forestry, Fisheries, and Wildlife and the Agency for Barani Area Development. A total of 12 new small dams were constructed under the ADB loan with a command area of around 10,400 ha. (The Small Dams Organization has constructed around 30 dams in total and has an ongoing program funded by the national budget). The project was implemented as planned and completed in March 1996, 2.7 years behind schedule, at a cost of $35.4 million, 27% less than budgeted. The loan was about $31 million, net of cancellation of $8 million. 115. The PPAR prepared in December 1999 noted that the technical assistance inputs were generally satisfactory, although the implementation consultants were retained for double the time expected, due to underestimation at design of the construction supervision requirements and the extended implementation period. Capacity building of staff of the IA was a positive feature of the project. The Punjab Economic Research Institute was responsible for project monitoring, and undertook a full set of benchmark and impact surveys that provided useful information on the output and outcomes. What this highlights is that when M&E is carried out properly by a competent organization the results can be very useful. 116. After interviewing the Small Dams Organizations senior staff, the evaluation team visited two of the dams that were constructed by the project (Kot Raja dam in Chakwal district and Tainpura dam in the Jehlum district) and discussions were held with engineering staff, farmer organizations executive members and the farmers in the field. The dams and main distributory systems have been constructed with reasonable technical standard and are generally operating close to expectation in terms of water storage and use. However, the O&M budget has been limited, and deterioration is evident in the distribution system. Staffing recruitment restriction has prevented the appointment of permanent staff on most of the schemes, and casual staff (work charge) has been paid from the schemes operating budgets. As maintenance status declines and the area irrigated increases, water availability is becoming limited, particularly at the tail-end of the schemes. 117. The utilization of the irrigation water falls well short of its potential and irrigation command area have not been fully developed. At appraisal, it was expected that the cropping
42

ADB. 1986. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the Islamic Republic of Pakistan for the Small Dams Project (Loan 750-PAK[SF], approved 17 January 1986 for $39 million). Manila.

45 intensity of 140% would be achieved in the command area by the end of ninth year. In practice the development of irrigation has been slower than anticipated and cropping intensity falls well short of the target, (in 1999 when the PPAR was prepared, an average of 6 years after construction, irrigated cropping had reached only 59%) and the situation is similar now. Irrigation development only extends to about half of the aggregate command area, due to the non completion of some canal networks, in-field leveling, and lack of watercourse development by farmers. The proportion of high-value crops grown has been limited: farmers mainly treat the irrigation system as an extension of their rainfed agriculture, applying some water to their traditional rainfed crops. Other constraints to the agricultural development include lack of capital, aversion to risk, and lack of self-reliance. Quite a large area is owned by absentees with jobs in the army, the private sector, or out-of-country, consequently they are not reliant on agriculture for their main livelihood. Substantial land is self cultivated. Despite these negative influences, it is evident that many farm families have experienced success with vegetable and fruit growing, and there are good prospects for enterprise expansion. Livestock numbers have increased considerably due to the increased availability of fodder. There were also considerable benefits from associated use of the stored water for fishing and domestic water supply. Land values were said to have increased ten fold following the provision of irrigation, resulting in a considerable private financial benefit to the land owners. Nevertheless the recalculated EIRR in the PPAR was 7.5% compared with 6 to 10% in the PCR and 16% at appraisal. 118. It is evident that there has been a lack of sufficient support and coordination from the Department of Agriculture (DOA) to mobilize the land owners to utilize the irrigation and to support the development of functioning farmer organizations to manage the distribution of water. The evaluation team was informed that there is only limited support from irrigation staff and there are frequent disputes about water allocation. During the discussions, the Project Director of the Small Dams Organization was quite candid about the limitations of the project saying the Irrigation Department is only responsible for delivering water; these sorts of project should be run by the Agriculture Department. 119. Conclusions and Recommendations. It is evident that the project has provided good support and built the capacity of the Department of Irrigation and Power to successfully develop small dams to convert rainfed areas to irrigated, with the potential for a high impact on poverty. But the realization of the full potential is constrained by the attitude of the beneficiaries and the lack of support for developing irrigation infrastructure and community mobilization. Considering the low economic performance of irrigation from small dams, further development of similar schemes should first ensure that the beneficiaries are committed to utilizing irrigation water and sufficient support is provided to develop the full potential as a precondition to construction. In addition in terms of the overall economic impact and effect on poverty this project has had a relatively limited impact. A $31 million loan for an irrigation area of only 10,400 ha, ($2,980 per ha) compared with the much wider and far reaching impact that could be achieved with a similar investment in irrigation reform for example. Interventions could explore opportunities for lower cost and smaller scale projects such as community-based storage facilities managed by the beneficiaries, as had been demonstrated in some RDPs. Opportunity for equity contribution or capital cost recovery from larger landowners who stand to gain large private financial benefits from increased land value should also be investigated. The demands on ADB staff for supervision and management is also top-heavy considering the relatively small size of the project. For these reasons this subsector should be regarded as a low priority for ADB assistance. It is recommended that further small dams development should be supported only if the relevant lessons gained from past experience are incorporated in the project design. Support for small dams could also be included in other development programs, such as the RDF discussed in the previous section.

46 6. On-Farm Water Management

120. ADB has funded a series of projects supporting on-farm water management). The latest was the Third Punjab On-farm Water Management Project, a $71 million project implemented over 7 years 19942002 covering 412,500 ha in southwest Punjab. This followed two earlier projects: On-Farm Water Management Project (1981) and the Second On-Farm Water Management Project (1984). Project activities included on-farm water course improvement, onfarm drainage improvement, irrigated agronomy improvement, training in water management and institutional support and project management. 121. The PCR for the first project highlighted that the emphasis was on civil works and achieving physical targets, and that less attention was given to the support for Water User Associations (WUAs) which could have significantly increased the earlier projects economic performance through strengthening the WUAs in the extension of improved agronomic and water management practices. This, in turn, caused a lack of cohesion within the WUAs, and little sense of ownership of facilities improved through the project, leading to a risk in their maintenance and, subsequently, and sustainability of project benefits. Furthermore the extension services that were expected to take responsibility for these project activities had limited incentive and experience, and were not able to introduce improved practices for irrigated agriculture, and for on-farm water management. It was also noted that the project implementation had no special focus on women, either as beneficiaries or participants, despite the importance of women in agriculture, although at this time gender issues were not given much attention in development planning. 122. The same conclusion could be drawn for the output of the second project. These projects were implemented at a time when farmer involvement in irrigation management had not been institutionalized and there was a lack of sustainability in the operations of the WUAs after the completion of the project. All projects suffered from a lack of an effective monitoring system to measure project performance. A continual and active monitoring system to recommend and encourage improvements as the Project evolved could not be established, and no management information system, other than the record keeping of target achievements and accounts, was established through the project. 123. The PCR for the third project noted that delays occurred in consultant recruitment that were mainly because of a failure to meet ADB guidelines, lengthy and cumbersome government recruitment and contracting procedures. None of the ADB review missions included members who could specifically review social and human development components of the Project and who could have assisted with the establishment and strengthening of the WUAs. 124. In general, however, watercourse improvement has improved the efficiency of delivery, increased water availability at farm gates, reduced time required to irrigate, increased crop yields and production, reduced conflicts over water rights, and increased land values. Watercourse improvement has enabled farmers to irrigate more area during the rotational water schedule. 125. Overall the project was considered as relevant and efficient but with serious issues concerning the sustainability of the WUAs and the maintenance of new infrastructure that was the responsibility of the WUAs. However considering the Projects achievements, even with its deficiencies, the projects overall performance was assessed as successful.

47 126. Conclusion. The improvement of OFWM and the rehabilitation and lining of canals can have a significant economic impact and improve water use efficiency but the larger issue is the sustainability of the rehabilitated infrastructure and the durability of the WUAs and farmers managed institutions vested with the ongoing responsibility for maintenance. Priority sectors for funding should be where there is a commitment to the devolution of irrigation management to farmer organizations so that on-farm water management is coupled with the devolution to farmer managed participatory irrigation management. 7. Chashma Right Bank Irrigation Project

127. The Chashma Right Bank Irrigation Project (CRBIP) was formulated in the early 1970s within the framework of the Indus River Basin Project. The project envisaged the construction of a 273-km long main canal originating from the existing Chashma Barrage and related infrastructure for the development of a command area of about 230,000 ha on the western side of the Indus River in NWFP and Punjab provinces. CRBIP occupies a prominent position in the annals of ADBs experience in Pakistan. Since its conception the project has been fraught with problems. 128. The original stage 1 project approved in 1978 with a total project cost of $104 million with an ADB loan of $31.5 million was completed in 1987. The project aimed to improve crop production over 230,000 ha, but soon after loan approval it was found the project scope and costs had been seriously underestimated necessitating project reformulation to a lesser area of 58,000 ha. 129. The ADB loan was suspended for 4 years from 1980 until 1984 while it was reassessed and reformulated. In 1982 it was decided to undertake the project in three stages, based on the original development concept. Other investments for development of water courses and drainage and on-farm water development in the command area were needed which the ADB financed in the second stage project.43 ADB has provided loans for all three stages, as well as for some related projects. Stage I of the project was completed in 1988 and stage II in 1994. Stage III was due for completion at the end of 2004 but is the subject to inspection by ADB. 130. To save costs in the stage I project about 30 km of the Chashma canal head reach was not lined. In spite of this significant design change, it was decided not to install interceptor drains to collect canal water seepage. The rationale was that the canal banks and bed would seal themselves within a reasonable period of time. 131. Unfortunately the materials used for the construction of the canal were not suitable resulting in significant seepage and water logging along the canal. The use of labor intensive construction methods by local contractors contributed to the problem. A larger canal cross section was adopted to further reduce the cost of lining with fine material to seal the canal. 132. The initial filling of the canal almost caused sections of the canal to collapse, and there was widespread canal seepage and flooding of adjacent areas and increased risk and uncertainty as to the extent of sealing and hydraulic stability of the canal, although this did improve in later years as the canal settled down. The seepage resulted in waterlogging and persistent flooding which damaged crops, houses and infrastructure causing serious environmental problems subject to compensation claims from the affected land owners.
43

ADB. 1984. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the Islamic Republic of Pakistan for the Chashma Command Area Development Project (Loan 0723-PAK [SF]). Manila.

48 133. The PPAR for the CRBIP stage 1 circulated in November 1990 rated overall performance as generally successful. The EIRR was reassessed as 10.4% compared with 19% at appraisal. The comment was made that the incremental benefits per unit area were expected to exceed appraisal targets, but production would be lower because of the reduction in command area. The problems with canal construction and resultant persistent water logging and the poorly served command area, while serious, only affected a relatively small portion of the total command area so the overall economic benefits were considered to be significant. 134. In was noted that political pressures contributed to the inadequacy of the initial project and the premature commissioning of the main canal in 1987, in spite of the ADBs objection. The CRBIP was the first large scale irrigation scheme that the Government had conceived, designed and implemented on its own and the WAPDA prepared study upon which the appraisal was based was inadequate as major changes in design and scope were required following startup. 135. An important conclusion from the PPAR is that the ADB should have maintained a firmer attitude throughout with respect to the type and extent of consultant services needed for construction management and supervision of agricultural and water management components. The question can also be asked why ADBs appraisal did not highlight the design deficiencies. In spite of the size and complexity of the project, few review missions were dispatched in the early months of implementation. It was clear that ADB was correct in insisting that resumption of loan disbursement be conditional upon reassessment of the project by ADB and that the Government take another loan for the development of the command area. 8. Chashma Right Bank Irrigation Project III

136. Stage III of CRBIP was approved by ADB in December 1991 as the third phase of the original project. Work on Phase III commenced in September 1993, initially due to be completed in December 2002. 137. At appraisal, the estimated cost was $287.5 million, to be financed in part by an ADB loan of $185 million and Kreditanstait fur Weideraufbau (KfW) cofinancing $40 million. The Government provided the remaining $62.5 million of the project cost. In June 1999, the ADB Board approved the provision of additional financing of $33.5 million to meet part of a $50.5 million financing gap caused by cost overruns. As of December 2002, the revised project cost estimate was $296.52 million; the ADB loan was $172.60 million; the KfW loan was $41.64 million; and the Governments share was $82.28 million. 138. Although the project was due to be completed in December 2002, as of 30 January 2004, it was reported that 99% of project construction was complete and that 80% of the total amount of the ADB loan had been disbursed. The date of completion was extended to 31 December 2004 and the project has not yet been closed. 139. The Feasibility Report outlined a project with four main components: (i) the main canal and related facilities; (ii) distributory canal and drainage facilities; (iii) on-farm water management; and (iv) agricultural and livestock extension. 140. The project planned for and promoted an increase in the use of fertilizers, pesticides, new seeds, and agricultural mechanization in order to maximize the productivity increase made possible by canal irrigation. The population in the project area was predicted to almost double by year 2000, largely due to in-migration of some 8,000 families (55,000 persons) that would be

49 attracted by new income opportunities. The plan did not foresee any need for resettlement of households, or any significant environmental impacts, which as later events have shown was a simplistic view. 141. Inspection Request. The CRBIP became one of the few ADB projects subject to inspection. While it is not intended to present a full record of the information about the events leading up to the inspection and the outcomes here, (which are available in various reports from the Compliance Review Panel website),44 the salient points that relate to the evaluation of the ANR sector are summarized here. 142. Following a request for inspection of the CRBIP (Stage III) project in November 2002 the Board of Directors of ADB approved an inspection of the project in April 2003 in accordance with the ADBs inspections procedures. This process had started with an official complaint made by a group of six individuals representing people affected by the project in May 2002. The complaint alleged that ADB had beached its operational policies and procedures in formulating and processing the project, which had an adverse effect on the affected persons through a variety of negative effects concerned with flooding, water logging, lack of access to grazing land, traditional irrigation, fuel wood and the impact on the ethnic minorities in the area from inward migration by other groups of people. 143. The Inspection Panels comprehensive report to the ADB Board in June 2004 dealt with all issues raised and held that the ADB had breached operational policies and procedures in the planning and/or implementation of the project concerned with the original project approved in 1991 and the additional financing approved in June 1999. 144. The Panel also held that ADB did not address the issues of rights of tribal/ethnic minorities, cultural integrity and traditional land use control, as specified in the 1986 Staff Instructions on Socio-cultural Impacts of Bank Projects and that ADB had never made any attempt to apply its Indigenous Peoples Policy and Instructions in the project. It should be noted that Management did not agree with the views and conclusions of the Inspection Panel and contended that the processes followed were in accordance with the provisions of the ADBs policy and procedures in place at the time 145. Comments on IPs Conclusions. There are several aspects from the report on the inspection process that are relevant to the wider application of ADBs policy and strategy, and its activities in Pakistan. 146. The IP made five overall recommendations based on the issues and its findings. Of these, three relate to the completion of the CRBIP project and implementation of remedial works for issues concerned with the inspection outcome, (specifically they are concerned with the extension of the loan closing date and the use of surplus loan proceeds to carry out remedial works; the arrangements for long-term funding of the implementation of a full environmental management plans; and the need for legally binding obligations to carry out the required measures).

44

Information about ADB Compliance <http://compliance.adb.org>.

Review

Panels

monitoring

is

presented

in

the

website

50 147. The two general recommendations are very congruent to ADBs activities in Pakistan. (i) With respect to ongoing and future large-scale canal irrigation projects of ADB, ADB should ensure that appropriate, reliable, transparent and participatory mechanisms are in place, so that the requirements under ADB's Policy on Involuntary Resettlement and Anticorruption Policy, specifically with regard to the following, can be carried out: (a) adequate compensation for land acquisition on a land-for-land basis or, when not possible, on a cash compensation basis at levels that enable the affected households to buy land of equivalent value; (b) any issues relating to corruption; and (c) the borrowing country's carrying out of any resettlement in accordance with requirements under ADB's Policy on Involuntary Resettlement; and ADB ensures that (a) sufficient ADB human resources are available to ensure a satisfactory level of support for, and monitoring of, the implementation of any resettlement plans, environmental management plans, or other measures required under ADB's safeguard policies; and (b) ADB staff are aware of their duties and obligations in the formulation, processing and implementation of ADB-assisted projects pursuant to ADB's operational policies and procedures.

(ii)

148. The first point highlights the importance of the participatory process and engagement with the affected communities in the planning and implementation process, which has become part of the operational procedures in current operations. The second point confirms the opinion of the evaluation team that there is a need for more resources to be allocated for the planning, management and supervision of ADBs operations, and of the need to increase the resources of the Pakistan mission and to have a better between the spread of projects and the human resources available for supervision and monitoring. 149. The Inspection report also raised an important issue with regard to the importance of compliance with project benefit monitoring and evaluation (PBME) requirements and the need to ensure that adequate PBME is carried out to assist project management in identifying problems and in taking earlier action to rectify them, thus resulting in superior project outcomes. Although for CRBIP benchmark and BME surveys were carried out before this compliance requirement came into place and were sufficiently comprehensive, it does underscore the importance of effective PBME. 150. This has implications for many other projects in Pakistan where the PBME activity, which is the responsibility of government, has not been carried out and implemented in accordance with ADBs guidelines and where PBME information is not sufficient to reliably indicate project impact. Even though it is the Governments responsibility, the ADB also has an overriding responsibility to ensure that Government actually does it, according to the direction prescribed in OM-23 relating to PBME.

51 D. Other Agriculture and Natural Resources Projects 1. Introduction

151. ADBs other support to the ANR sector has been varied and has covered a wide range of projects, although with limited apparent continuity or consistency of support to some areas over the period. With the exception of the projects to support the Agricultural Development Bank of Pakistan (19861995), and the Agricultural Credit (19901994) other projects to support the rural finance sector have not been included in this evaluation as they are included in separate report on support to private sector development commissioned under the country assistance program evaluation. 2. Performance Assessment

152. In the other category of the ANR sector ADB has funded 11 significant loan projects since 1985 covering a wide range of activities and subsectors including forestry, livestock, fruit and vegetable marketing, credit,45 and program loans for policy development. ADB also funded important TAs for integrated pest management, national conservation strategy and a forestry sector master plan. Of the 11 loan projects, 2 are ongoing, the rest have been completed. Of those projects that have been completed, 8 have a PCR, of which 1 is rated as successful, 5 as partly successful, and 2 as unsuccessful. Of the 3 projects which have a PPAR, 2 are rated as partly successful and 1 as unsuccessful. Table 23 shows the details. The rating by the evaluation team has 3 as successful, 6 as partly successful, and 2 as unsuccessful. Overall the performance of this group of projects is rated as partly successful. Table 23: Performance Assessment of Other Agriculture NR Projects
Project PCR Rating PPAR Rating 0791 Cotton Development Project Partly Successful (19861999) 0810/ Second Agricultural Development Partly Successful 0811 Bank of Pakistan (19861995) 0825/ Agricultural Inputs Program Partly Successful 0826 (19861989) 0851 Fruit and Vegetable Marketing Project Generally Successful (19871996) 0973 Livestock Development Project Unsuccessful Unsuccessful (19891999) 0916 Second Aquaculture Development Partly Successful Project (19922001) 1044 Agricultural Credit Project Unsuccessful (19901994) 1062 Agriculture Program Loan Partly Successful Partly Successful (19901994) 1403 Forestry Sector Project (1995ongoing) 1076 Sindh Forestry Development Project Partly Successful (19912002)
45

SAPE Rating Partly Successful Partly Successful Partly Successful Successful Unsuccessful Successful Unsuccessful Partly Successful Partly Successful Partly Successful

The two more recent rural credit projects funded by ADBMicrofinance Sector Development Program (MSDP) approved November 2000, and the Rural Financial Sector Development Program (RFSDP) approved November 2002 are included in the Pakistan Private Sector Assistance Evaluation 19852004. These projects designed to address fundamental structural and market failures in the rural financial system. The evaluation team assessed the MSDP as being potentially successful and the RFSDP as potentially unsuccessful.

52
Project 1877/ 1878/ 1879 PCR Rating Agriculture Sector Program Loan II (2001ongoing) PPAR Rating SAPE Rating Successful

PCR = project completion report; PPAR = project performance audit report; SAPE = sector assistance program evaluation; = not yet evaluated. Source: Asian Development Bank PCR and PPAR documents and ratings by sector consultants. Source: Asian Development Bank database.

153. As with the other sectors, the 11 projects were evaluated using the main evaluation criteria based on evaluation documents and the consultants assessment of their design and performance. The results are shown in Table 24 below. The distribution of ratings by the main evaluation criteria shows that all were relevant or highly relevant, effective or less effective, and less efficient. Most were clustering around a ratings score of 1 (less likely) for sustainability. Most also scored institutional development/other impacts 2 and 1, indicating a relatively high impact in this respect. This can be interpreted as meaning that all projects were relevant to ADB and Governments objectives, most were less effective in achieving there objectives and were not efficient in generating the economic returns envisaged in their design. There were assessed poorly for sustainability, but did have an impact on institutional development. Table 24: Frequency of Scores by Main Criteria for Other ANR Subsector Projects Scorea Criteria Relevance Efficacy/Effectiveness Efficiency Sustainability Institutional Development/Other Impacts
a

3 2 0 1 0 1

2 9 4 2 2 5

1 0 7 6 6 5

0 0 0 2 3 0

Score of: 3 = highly relevant, 2 = relevant, 1 = partly relevant, and 0 = irrelevant. Source: Consultants estimates.

154. In the following sections, more significant recent projects that were evaluated in more depth by the evaluation team are discussed. 3. Livestock Development

155. ADB has funded one major project in the livestock sector through Loan 973-PAK (1989 1999) costing $55 million. The loan became effective in December 1990 and was scheduled to close in June 1997. Actual loan closing was January 1999 with disbursement of $30.6 million resulting in cancellation of $23.8 from the ADB loan. The Project was formulated through a PPTA in 1989 which built on the Livestock Sector Study in 198746 cofinanced by FAO. The executing agencies were the Federal Livestock Division, MINFAL and the provincial livestock departments responsible for livestock and diary development in the provincial governments of Balochistan, NWFP, Punjab, and Sindh. 156. The project objective was to increase livestock production by improving livestock productivity in the selected areas of Pakistan. The Project aimed to support the Governments livestock development efforts in (i) establishing a policy and institutional framework to
46

ADB. 1986. Technical Assistance to the Islamic Republic of Pakistan for the Livestock Sector Study (TA 0804, approved October 1986 for $188,000). Manila; and ADB. 1987. Technical Assistance to the Islamic Republic of Pakistan for Preparing the Livestock Sector Project (TA 0928, for $75,000). Manila.

53 encourage private investment in the subsector, (ii) increasing livestock production and improving meat and byproduct utilization, and (iii) accelerating livestock development to increase rural employment and income. 157. Both the PCR 1999 and the PPAR September 2004 considered that the project was a failure. It is evident that the experience of this project has caused ADB and other financing agencies to be shy of supporting livestock development in Pakistan through state run services and investment in public infrastructure. The economic reevaluation of the project in the PPAR confirmed the PCR findings of a negative EIRR due to limited incremental production, low adoption of technology, and delayed implementation of breeding and extension initiatives. 158. There was resistance to reorienting the traditional veterinary health-based extension services to a more bottom up, production-based system. Although the Government's disease monitoring was improved, and extended through a subsequent project (EU supported disease control and vaccination program),47 rivalry among the provincial executing agencies, caused by preferential resourcing of production-based activities, had a negative impact on overall project coordination. The appointment of extension staff to support the village livestock extension committees were partly effectiveparticularly those associated with the adoption of new technology for on-farm production of fodder for milk production, although benefits were restricted to committee members and those with adequate land resources. 159. Animal breeding initiatives were partly successful. But activities were delayed by the need to introduce the recording of herd activities before semen was collected from proven sires. (That activity ceased after project completion.) The rehabilitation and resourcing of semen production units, using both local and imported semen, helped improve the genetic quality of the livestock populations. This was complemented by the privatization of veterinary servicesa major project accomplishment. 160. The slaughterhouse initiatives are considered a failure, because only two were completed before this component was canceled because of conflicts between central and provincial administrations. Of the two completed slaughterhouses, the one in Balochistan has never operated and the other in Sindh, required additional local government funding for equipment, and is not fully utilized. Structures are falling into disrepair, because of lack of use and maintenance. 161. The project successfully completed an extensive training and study tour program involving international fellowships, short study tours, and in-country training, mostly captured by government staff. However, local trainees did not highly regard the on-the-job training that the consultants provided. 162. Consultants inputs were often poorly coordinated and their inputs changed during implementationcausing conflicts in technical advice in areas such as slaughterhouses. The only project-supported programs that still operate after the end of the project are those that involve the private sector, or where beneficiaries are charged for services, such as the semen production units and the private veterinary services. The extension committees and the training centers that were devolved to lower administrations either no longer operate, or operate at considerably lower levels. Project initiatives could be sustained only with adoption of the "user
47

The EU provided a grant of 1.8 million to FAO for implement a project for Rhinderpest, Foot and Mouth and Peste des petits ruminants (PPR) disease control and to strengthen livestock services for vaccine, regulation, and marketing. Under the WTO rules Pakistan cannot export livestock products if its not free of Rhinderpest.

54 pays" principle. Extension initiatives were never institutionalized, so are not considered sustainable. Individual capacities may still be available to the subsector from temporary appointments, but the real impact remains uncertain. 163. Livestock plays an important role in the rural economy and 25% of livestock owners are landless, with high poverty incidence. Thus, the project was well targeted for impact on the poor, but participation of livestock owners in village livestock extension committees was not required, and technical messages rarely extended beyond committee members. Thus, the potential socioeconomic impact was not fully realized. The appointment of female livestock production officers, however, was effective. Working with femalesPakistans traditional livestock managerscircumvented cultural barriers. 164. Key issues for the future include (i) avoid developing public extension services that cannot be sustained after project completion, (ii) the need to institutionalize improved capacity for monitoring in institutions that will be retained and resourced after completion, and (iii) avoiding appointing temporary staff to public institutions for duties that cannot be sustained after completion. 165. Lessons identified include the importance of (i) a phased approach for new and innovative delivery mechanisms to ensure that activities are tested and modified on a small scale before large-scale adoption; (ii) carefully looking at producer incentives to use new technologies, and promotion of their cost effectiveness; (iii) an early warning mechanism to alert managers and, steering committees when project progress is slow or barriers are encountered; (iv) post-project monitoring through the institutionalization of monitoring procedures during implementation; and (v) a thorough assessment, during the design phase, of an institutions willingness and capacity to change. An opportunity exists for greater poverty reduction through livestock development. However alternative mechanisms need to be developed for providing support services that involve the private sector, and with sustainable extension mechanisms. 166. Although the quantifiable benefits of the Project are much lower than anticipated at appraisal, the non-quantifiable benefits are pro-poor. These include farmer awareness of the need for improved technologies; farmer awareness of the importance of health and feed management; awareness of the participatory approach; awareness of the importance of nonhealth interventions such as feed management and better husbandry; privatization of veterinary services; and promotion of private seed and feed marketing services. 167. The close linkage between livestock production and poverty was reinforced. It was evident that the livestock subsector is one of the more appropriate vehicles for addressing poverty reduction. Livestock are reported as contributing about 48% to the GDP of the agricultural sector. (Although a recent change in the methodology for measurement of the contribution has increased this percentage from previous estimates). Small ruminants and poultry are common among the rural poor; improving their productivity can have significant impact. Raising livestock is a means by which poor and landless people can accumulate wealth and saving as a buffer against unexpected needs. Most outputs for the dairy industry are consumed locally with only about 20% traded. The Government recognizes that the livestock sector has a major in rural development as a means that poor people can increase livelihood. The subsector is given a high priority in the MTDF. Recent initiatives include the creation of the Pakistan Dairy Development Corporation and the promotion of active collaboration with the private sector and NGOs in enhancing outreach of extension services.

55 168. Support for livestock development is included in the forthcoming ADB loan for the Agribusiness Development Project which includes provision for setting up a Livestock and Dairy Development Board and support for private sector agri-business livestock development initiatives through the agribusiness support provision and agribusiness finance fund to matching grants for new business development. Several of the ADB-funded RDPs also involve participatory approaches to support small-scale livestock development. Other funding agencies such as the EU and FAO have an advantage in supporting the sector through their wider inhouse technical resources for planning and implementing projects. Currently ADB does not have livestock experts on its staff, either in PRM, or headquarters. 169. The recommendation of the evaluation team is that ADB should wait on the outcome of this project before allocating further funding to the livestock subsector. Never the less the role of the public sector for livestock development is limited, as this is a subsector that could be expected to be served by the private sector.48 In Pakistan, the involvement of the public sector in the development of the livestock subsector has been limited to the provision of veterinary services, breed improvement and artificial insemination services. Very little attention is paid to the animal husbandry aspects, such as extension services to increase awareness of the need for better hygiene and animal feeding practices. Livestock farmers interviewed by the evaluation team generally expressed their dissatisfaction with the accessibility and availability of livestock extension staff, who are constrained by the lack of transport and budgetary support for supplying veterinary medicines. There is a need for the public sector to move out of providing veterinary services, making way for the private sector, and to focus on providing extension services for improved animal husbandry practices. 170. In the opinion of the evaluation team the role of government should be limited to regulatory, public health and security functions such as border surveillance, animal disease prevention, monitoring and control, ensuring quality standards for public health issues, and ensuring quality standards for inputs for animal remedies and vaccines. 4. Forestry

171. The ADB has had two significant projects in the forestry sector in Pakistan: the Pakistan Forest Sector Master Plan49 (FSMP) prepared from 1989 to 1993 under TA No. 1170-PAK; and Loan 1076-PAK (SF) for the Sindh Forestry Development Project (SFDP). In addition following the completion of the Forestry Sector Master plan TA was approved for the preparation of the proposed Forestry Sector Development Project. 172. Pakistan is poorly endowed with forest resources and has one of the lowest forest-toland ratios in the world. Of its total land area of 87.9 million, about 65% are uplands, hills and mountainsmainly in the north and west that form the bulk of the critical watersheds. Actual forests only cover some 4.8% of the total land area while rangeland makes up 60%. Forests largely comprise the conifer forests in the northern mountains. In addition there are areas of riverine forests and irrigated plantations along the major rivers in the Indus Plains and ecologically important mangrove forests in the Indus Delta. About 85% of the forests are owned by the Government. The increasing demand for food, timber, and fuel wood has resulted in severe deforestation and degradation of watersheds that threatens the natural resource base
48

As is the case for the livestock industry in other developing countries, for example Indonesia where the procurement, transport, processing, and marketing of livestock is carried out by private enterprise. 49 TA 1170-PAK, Pakistan Forest Sector Master Plan, approved for $1.25 million on 22 June 1989. The United Nations Development Programme and the governments of Germany, Netherlands, and Switzerland also contributed to the plan.

56 (90% of rural households use wood and biomass for fuel). Pakistan imports most of its commercial timber and forest product needs (mainly timber, pulp, and paper). 173. The FSMPs main objective was to prepare an integrated 25-year master plan for the development of the forestry industry. It concluded that national wood consumption is twice that of sustainable production from the existing forest estate and severe wood scarcity would eventuate in the future unless there was major intervention to increase national wood production. To achieve this goal the FSMP proposed a five-pronged action program focused on: (i) soil conservation and watershed rehabilitation, (ii) increased wood production with processing and marketing, (iii) preserving the ecosystem and biodiversity, (iv) strengthening provincial institutions and policy formulation, and (v) strengthening national sector institutions research, planning, monitoring and evaluation and policy making capabilities. The development of private plantations on the plains and development of rangelands of the upland watersheds was identified as the important objective. 174. The FSMP provided a national perspective and identified the critical constraints and long-term goals, strategies and priority sector programs required to rescue the forestry sector. These broad plans were needed to be implemented through feasible projects at the provincial level within the framework of a coordinated national policy and regulatory system. It proposed a comprehensive plan for the development of forestry and the reformation of the Forestry Departments responsible for managing the forestry sector. Community approaches to joint forest management and partnerships with other donor, such as the Swiss Development Corporation are part of the program. The NWFP province, where most of the forest resources, are located adopted the reforms and introduced the matrix system of forest management involving the participation and joint management by local communities, rather than the traditional forest guard approach. The EU and UNDP and bilateral funding agencies have also provided assistance to the NWFP to reduce the economic pressure to exploit the forests by introducing alternative income generating activities, including setting up a Forest Development Fund, to generate resources and sustain investments in the sector. A evaluation of the FSMP has not been carried out, but the assessment of the evaluation team is that is appropriate highlighting the importance of addressing the issues in the sector and proposed a plan for restructuring the responsible government agencies, which have been adopted, in intent, if not in practice. There is resistance by the old guard to implement the reforms but there is a growing cadre of younger more innovative foresters who recognize the importance of reform and have commitment to the process which hopefully will be adopted with time. 175. Sindh Forestry Development Project (SFDP). The main project stemming from the FSMP was the SFDP 1991-2002. The SFDP had the objective of developing the Sindh forest sector with two main strategies: (i) to maximize production within Government-managed forests through intensive management, to plant trees on denuded areas in riverine and inland forests, and to improve mangroves and rangelands; and (ii) to promote social forestry to increase wood production through plantations on private lands. 176. The project cost was $52.00 million with an ADB loan of $41.60 million. The Government was to provide another $9.2 million and the private sector, $1.20 million. The actual project cost was only $26.19 million. Costs were reduced because of devaluation of Pakistan rupee against the US dollar, and the US dollars devaluation against the Special Drawing Rights (SDR); the private sector component was eliminated, and targets for riverine forests were reduced. 177. The PCR noted that the project was generally implemented as conceived with all major targets were either met or exceeded. Major revisions during implementation were the

57 cancellation of the private sector component, the expansion of the social forestry component to cover the entire province, and the extension of the loan closing date from June 1999 to June 2001. The private sector component was canceled mainly because leasing of Government lands was banned. The social forestry component was expanded to take advantage of a growing awareness and interest in tree planting in the rest of the province. The loan closing date was extended to complete the physical target, provide basic care for newly planted seedlings, and formulate management plans for the sustainable management of irrigated plantations. 178. Although the Project also intended to target the poor through greater availability of fuelwood and employment generation, its social forestry components appears to favor participants with land holdings. Also, in consonance with the approach taken in other projects in the early 1990s, the Project used an engineering approach in selecting subproject sites in riverine and inland forests, and SFD staff focused primarily on fulfillment of physical targets thus excluding participation of the communities and, particularly, the landless poor. 179. The cancellation of the private sector credit component became inevitable because the province banned the leasing of government lands in 1994. Experience during implementation highlighted that private sector involvement in developing reserved forests would require a policy that allows the utilization of Government-owned land. To facilitate the process, ADB also provided details on forest land management agreements in place in other countries. The key concept of the forest land management agreements was to promote partnership between government and private entrepreneurs to improve use of otherwise idle forestland. But the Sindh government was reluctant to enter into partnership with the private sector because of the high incidence of encroachments on permanent forests after the earlier approval of temporary leases and no progress could be made to move the private sector component ahead. Consequently the private sector component was canceled in 1996, as recommended in the MTR. 180. A PCR for the project was completed in May 2003.The reevaluated EIRR in the PCR for the Project is 9% versus 20% at appraisal. A variety of factors contributed to this difference, including over-optimistic estimates of yield and prices, drought over the last 3 to 4 years, the delay in the establishment of plantations, and failures in some plantation areas. Besides the economic benefits other non-financial project benefits should be considered in assessing its efficiency. These include (i) employment generation; (ii) positive impacts on conservation and environmental protection; (iii) livestock grazing areas; (iv) institutional capacity building; and (v) farmer training. 181. At completion, the project is still relevant in the light of the forestry sectors strategy for development of forestry resources as embodied in the FSMP. Wood production to meet the increasing local demand still remains an important issue in the forestry sector. While the project provided increased employment for the poor, it did not directly address poverty reduction. Thus, its impact on poverty reduction has remained limited. Overall, the project is considered relevant and efficacious. It had a significant impact on the institutional development of SFD. But the project is considered less efficient than others, and its sustainability is not yet assured. The project is rated as partly successful. 182. A review of ADBs forest sector policy emphasized an explicit linkage between forest sector investments and poverty reduction with environmental protection. This will require both increased participation, and sharing of responsibilities and benefits, with poor local people. For this, SFD may have to shift its focus from mostly technical to a combination of technical and

58 social aspects of forest management. SFD must take a facilitative or coordinative role, guiding its new partners in forest development, and ensuring that adequate assistance is provided. 183. Development of commercial plantations involving the private sector will require a liberalization of the rules concerning the long term lease land controlled by the forestry department. There is potential for the development of public-private partnerships for the development of plantation forestry investment models similar to those developed in many countries but this will require a change of policy by the government. This sort of project would be more suited the private investment area of the ADBs operations. 184. Considering the poor performance of this loan and the failure to establish the conditions necessary to attract private sector investment, further ADB assistance to the forestry sector is regarded by the evaluation team as being a low priority and it is recommended that there should be no further projects. Future support, if any, should be limited to the development of watersheds and protection/rehabilitation where there are significant public good benefits, (such as the protection of dam water catchment areas), and support to commercial forestry investment through other lending modalities where there is interest. Support for watershed protection/rehabilitation should only be linked to irrigation infrastructure and flood protection investment. 5. Agribusiness Development

185. Implementation of an ADB-funded project to support agri-business started in June 2005. The project comprises five components: (i) agribusiness support service provision, (ii) agribusiness finance development, (iii) agribusiness capacity building, (iv) agribusiness policy and enabling environment development, and (v) project management support. The overall objective is to promote growth of agribusiness through supporting the development of a more competitive and sustainable agribusiness subsector. Project activities will focus on improving access of agribusiness enterprises to business development services (to be established in each province) ); strengthening business development service providers to enhance skills throughout the agribusiness subsector; expanding access to agribusiness finance; and developing institutional capacity. The project will concentrate on horticulture and horticultural business; but interventions to improve the livestock and dairy institutional framework will also be supported. The project interventions are planned to contribute to strengthening and developing private sector capacity, involvement, and investment in agribusiness. A core activity is to provide matching grants to entrepreneurs investing in new agribusiness ventures from a special support fund intentionally established at arms length outside MINFAL to promote good governance and accountability to all stakeholders. Its governance structure is designed for management by the private sector where feasible. 186. The design of the project makes the important assumption that small businesses in the private sector have sufficient capacity to initiate agribusiness enterprises, but need the projects support in technical, managerial and financial aspects to expand their operations. In this regard the project is ambitious and risky as it will have to deal with the reality of establishing profitable businesses in an environment where the primary marketing chains and market functionaries operate inefficiently without assured and stable prices. Because of low productivity and high cost of raw material, it is doubtful that there will be enough domestic demand for processed products in a situation where more than a third of potential consumers are below poverty level with limited purchasing power. For this reason incremental production is to be also targeted to the export market.

59 187. Nevertheless, a positive aspect of the startup of project implementation has been the effectiveness of the short-term TA included in the project to assist project management kickstart the project, setting up the project management unit, making the institutional arrangements and assisting with consultant recruitment. 6. Integrated Pest Management (IPM)

188. ADB provided assistance to IPM50 program through TA 3383-PAK: Integrated Pest Management Project approved in December 1999.51 It followed an earlier regional TA to assist IPM and was implemented with the support of FAO.52 IPM has a particular significance to Pakistan because of its relevance to the cultivation of cotton and the overuse of pesticides. Pakistan is the fourth largest producer of cotton in the world and cotton is a significant contributor to the country's export earnings. There are an estimated 1.3 million cotton farmers cultivating 3 million ha (15% or the cultivated area), many of whom depend on the cash crop for their livelihood. Over the past two decades, pest problems have continued to grow, despite a massive increase in pesticide use to 45,000 tons per year. For control of pests, farmers have tended to rely on increased application of pesticides alone. 189. From a promising pilot with farmer field schools IPM in Punjab in 1995, the IPM approach has been successfully replicated and spread to other areas of Punjab and Sindh under the efforts of the National Integrated Pest Management Program). The ADB TA was designed to provide support for on-farm participatory research for IPM and for HRD through training-of-trainers) and farmer field schools (FFS) in selected districts in Punjab and Sindh provinces. The total cost of the project was $745,000 with ADB financing of $500,000. The executing agency was MINFAL. The TA was successfully implemented over 3 years from 2000 to 2003. To assist in TA administration, FAO was contracted as implementation consultant. 190. A review and assessment of the ADB TA was conducted by an ADB staff consultant in February 2004. The review had this to say about the impact of the project: Simply referring to target numbers and attainment, though, misses the on-theground impact of FFS IPM in Pakistan. In site after site visited during the Consultant review, the farmers articulated three main gains. First, farmers stated that, prior to training; they generally viewed all insects as pests. After having undergone the training, the farmers cited their ability to distinguish between helpful and harmful insects. Second, farmers pointed to a gain in confidence through conducting experiments and working as a group in FFS. Through this work, farmers noted that they were much more aware of the stages in the crop cycle and the many different relationships at work, i.e., water, soil, nutrients, insects, etc. A third area mentioned by farmer groups was their increased awareness of crop economics and that significant cost reductions can be achieved through a judicious approach to pesticide use.
50

IPM is defined as a pest management strategy that aims at diversifying pest control practices so that the use of pesticides is minimized or eliminated. IPM adheres to three basic principles: (i) keeping pests below economically damaging levels rather than seeking to eradicate them; (ii) rely, to the extent possible, on nonchemical measures to keep pest populations low; and (iii) selecting and applying pesticides, when they have to be used, in a way that minimizes adverse effects on beneficial organisms, humans, and the environment. 51 ADB. 2000. Technical Assistance to the Islamic Republic of Pakistan for Integrated Pest Management. Manila. 52 TA 5514-REG, approved in December 1992 for $760,000, covered the Peoples Republic of China, India, and Pakistan and found that by using IPM technology insecticide application could be reduced by at least 50% with cotton yields and farm income were maintained or increased. ADB. 1992. Technical Assistance to CAB International for Integrated Pest Management in Cotton. Manila.

60 191. A number of other accomplishments were attained in line with the TA framework including production of farmer educational aids, building awareness of trainers and policymakers; developing collaborative applied research between researchers and farmers, and incorporating the role of women into the IPM training program. The TA listed appropriate policies on IPM as a performance target and as a result under NIPMP, with assistance from UNDP and FAO, a policy framework for IPM was established along with plan for action. Another sign of impact is the increased interest and commitment shown by government. In mid-2004, the Government began a PRs200 million project to support NIPMP (including cotton, fruit, and vegetables) and the provincial government of Punjab has decided in principle to scale up IPM over a 5-year period through an Integrated Crop Management program. 192. The ADB evaluation team concluded that the ADB TA has been implemented with good results. It had accomplished the replication of the Vehari pilot FFS IPM and demonstrated appropriateness for scaling up and surpassed or substantially accomplished the targets of the TA, and has made headway in other related areas. One of the strengths of the IPM program is the linkages to and support from international agencies that are working in this sector that can provide resources and intellectual rigor to the development and application of the methodology. Overall the ADB TA for IPM is rated as successful. 193. It is clear that IPM can have a significant impact on reducing poverty through reducing farm expenditure on pesticides, fertilizer and irrigation by empowering farmers to have more control over their farming system and their environment. A broader application of IPM principles has the potential to revitalize agricultural extension through the participation on farmers in the program. IPMs impact on poverty reduction is also significant. This aspect was evaluated in a recent study conducted by staff of the National IPM Program (Khan and Ahmad. 2004.).53 Their study concluded that, based on a small sample of FFS and non-FFS farmers and a control group removed from any peripheral influence, a significant reduction in poverty by 25% after two years of IPM had been achieved. Thus, the broad scale application of IPM through the FFS and the empowerment of farmers have the potential to reduce poverty and improve livelihoods. IPM techniques are applicable to other aspects of agriculture too, such as irrigation agronomy, soil management, crop, and livestock production. The development of the FFS also empowers farmers to resist the powerful pesticide lobby that encourages farmers to use more pesticide in the interests of selling more products. The quality of pesticides and fertilizer supplied by some firms is poor and ineffectual leading to wasteful use. The health hazard from misusepoisoning and residuesis also significant so any reduction in use also has additional benefits from the public health and environmental aspects. 194. The application of IPM is not a universal panacea to correct the ills of the agricultural sector, but it has been shown to have a positive impact on improving the livelihoods of rural people with synergy with other cross-cutting programs in health, education and governance through its empowerment and increasing self reliance, self-awareness, and better awareness of the environment. 195. Recommendations for the Future. The evaluation team recommends that ADB should support the mainstreaming of the IPM and FFS approach and that this should be a part of the strategy for support for increased agricultural productivity, rural livelihoods and poverty reduction. The review team was advised that a provincially administered project would be more
53

Impact of FFS-based IPM Knowledge and Practices on Rural Poverty Reduction: Evidence from Pakistan prepared by Muhammad Azeem Khan Principal Scientific Officer and Iftikhar Ahmad Deputy Director General/National IPM Coordinator, National IPM Programme, National Agricultural Research Center, Park Road, Islamabad, Pakistan.

61 productive than a project administered by a federal agency. Under the devolution of administration the implementation of IPM could also be done through the district administration. Government has indicated its commitment through the initiation of a nation wide program broadened to other crops and sectors with the likelihood of this approach being integrated into mainstream agricultural extension services. The Government has requested further TA from ADB for capacity building and training to expand the FFS and IPM approach but at this point there is unlikely to be the need for major public investment funded by a loan, although the replication of IPM to the 1.3 million cotton growers in Pakistan, and for other agricultural and livestock activities will require a major investment over a long time frame. Subject to a clear indication of the Governments intentions and request for a loan, the ADB should consider funding a loan and TA of $50 million as a first phase of the program. E. Policy and Program Support

196. ADB has provided two program loans to Pakistan for the ANR sector. The first Agricultural Program loan (APL I) was from 1990 to 1994 and the second Agricultural Sector Program Loan (ASPL II) started in 2002 and is scheduled to run for 5 years until the end of 2006. Documentation for APLI includes a PCR and PPAR. 197. It is surprising that ADBs support for policy reform has only figured twice in the investment program during the last 20 years and with an interval of 12 years between the two loans. Considering the need for reform and restructuring imperatives of the ANR sector, a sounder strategy may have been to provide more support for reform on an ongoing basis to underpin structural adjustment, and as a prerequisite for other subsector projects. This would indicate that policy and program support was not part of the main enduring strategy, but rather the program loans were established when government was more accepting to the restructuring program and as a means to gain access to foreign exchange. During the duration of the program loans ADBs support for other ANR subsectors was limited to projects concerned with credit, aquaculture, and fruit and vegetable marketing and there were no close linkages to other parts of the investment program. 1. Agricultural Program Loan I

198. APL-I was approved by ADB in 1990 to support the Governments effort to address problems and constraints in the agriculture sector through economic restructuring and structural adjustment. The major objectives of APL were to increase agricultural production and productivity on a sustainable basis and to raise domestic resources for productive investment in the agriculture sector. The program supported a structural adjustment and development program, market oriented policies, and private sector participation in agricultural activities with the public sector providing institutional support and consisted of a series of policy and institutional reforms. The scope included (i) progressive adjustment of prices of key agricultural inputs and outputs to reflect real resource cost, (ii) gradual transfer of certain public sector operations to the private sector, and (iii) orientation of public sector investment toward rehabilitation and improvement of existing facilities. 199. ADB provided a loan of $200 million equivalent from its Special Funds resources. The first tranche of $100 million was released in December 1990 and the second tranche on 17 March 1994. The loan account was closed on 30 June 1994 after a 1-year extension. The Ministry of Finance and Economic Planning was the EA and the MINFAL the IA. The State Bank of Pakistan was given responsibility for the administration and utilization of loan proceeds. The

62 task of monitoring and coordination was delegated to the Economic Affairs and Statistics Division. 200. The PPAR for the project prepared in October 2000 concluded that most of the reforms were undertaken, however, the reforms carried out were not comprehensive or adequate, and were not effectively implemented so that unfinished business to complete the process remained at the end of the loan. Many of these issues have been dealt with in the subsequent ASPLII. For example policy reforms on deregulation of the fertilizer subsector, discontinuation of the wheat procurement price, and removal of the subsidies. Cost recovery in the irrigation sector remains an important issue as is the effective promotion of fruit and vegetable exports. The Agriculture Wealth Tax Act was enacted in 1994 with an associated increase in the agriculture land produce index that would enhance agriculture sector tax collection. Although this has created awareness in rural areas on paying taxes on farm revenues, the government has not been committed to supporting the institutional capacity to collect tax, and the amount of tax revenue collected is significantly below that envisaged. 201. In conclusion, it was stated in the PPAR that the program objectives were too broad and overly ambitious, covering a number of issues without considering the institutional capability and the preconditions necessary for effective reform measures. The proposed changes had ramifications for the entire economy and there was an absence of detailed policy studies showing the likely impacts of the proposed changes. For example, the removal of the fertilizer subsidy without a full increase in the crop procurement price to market price resulted in higher fertilizer costs incurred by the farmers. 202. The policy and development agenda lacked priorities and performance indicators, and the implementation arrangements did not provide for good coordination and cooperation among stakeholders and the concerned institutions, including government line agencies. This severely limits opportunities to monitor progress, identify needed adjustments in the sector program, and conduct an effective policy dialogue between the Government and ADB. The implementation of policy reform has not been effective and the Government lacked the commitment to adopt strategies and consistent policies in implementing the Program. Little support was provided for rural infrastructure facilities, extension, and research and development. 203. The Program contained too many reform measures and each of them was treated too broadly to be effective in bringing about meaningful changes. The sequencing of the reforms was poorly thought through. There was an absence of clear targets to be achieved within a time-bound policy framework. 204. Both the PCR and the PPAR rated the projects performance the same as less than successful: the PCR considered the program as partly successful, while the PPAR considered that in view of the many constraints in implementation, weaknesses in program design and the mixed results, the program was less than successful, (the same rating as the former partly successful). 2. Agricultural Sector Program Loan II (ASPL)

205. The ASPL was approved on 13 December 2001 in three loans totaling $350 million in a mix of funds from ADF and ordinary capital resources (OCR), to be released in three tranches: (i) the first tranche of $125 million was released in September 2002; (ii) release of the second tranche of $100 million was targeted for April 2004, but is now delayed due to lack of sufficient progress made in policy reforms; and (iii) release of the final tranche of $123 million is targeted

63 for September 2007. The program also provides $2 million for consultants to assist implementation. 206. Like ASPLI, the primary objective of the Program is to promote growth through increased agricultural productivity and profitability, to be achieved by: (i) promoting efficient markets for the major commodities, including wheat, cotton, rice and sugarcane, in order to promote marketbased incentives for small farmers; (ii) liberalizing markets for fertilizer and seeds; (ii) strengthening support services in small farmer extension, training and research; and (iii) enacting regulations to improve quality control of farm inputs. The documentation for ASPL II says that it incorporated lessons from ASPLI and the experience of other agencies I, which were grouped as (i) program prioritization and design, (ii) implementation and timing of politically sensitive reforms, and (iii) program linkages. ASPLII has more focus on policy distortions and support for the restructuring of institutions. However it does not appear that the design of ASPLII was based on an analysis of sector development needs and opportunities, especially the implications for the provinces. The design was weak on public consultation. It has to be acknowledged that agriculture is a provincial activity, reforms impact on the provinces, so the commitment of the provinces is crucial. The implementation of ASLPII has encountered many of the same problems that affected the ASPLI. 207. The release of funds in the three tranches is conditional on the fulfillment of certain reforms and conditions which requires close monitoring. The Ministry of Finance is responsible for coordinating and monitoring the implementation of the program and administering the utilization of the loan proceeds, supported by the MINFAL, the Ministry of Commerce and the provincial governments. An accompanying TA loan is provided to assist the Government in (i) policy advice and program coordination, including legal, monitoring, and environmental services; (ii) improving the efficiency of commodity markets; (iii) small farmer extension, research, and safety nets; and (iv) reorganization and restructuring of state-owned enterprises. 208. ASPLII was designed to complement the Government's macroeconomic reforms, which are supported by the World Bank and the International Monetary Fund, and which it does through its support for the restructuring of the sector, reducing the role of government, promoting market reforms, supporting the role of the private sector and giving more responsibility to the provinces. However, the program was agreed to at a time when the Government was facing a monetary crisis with limited foreign reserves in the midst of an International Monetary Fund-led structural adjustment program, which tempered the acceptance of the conditionalities included in the program that were not necessarily carried over into commitment to carry them out. In additional the program was designed before government introduced devolution and the creation of LGs which has impacted on the change in responsibility for the delivery of some services, especially extension. The impact of the consultants work in wheat policy reform has been positive. 209. Loan funds are also made available to the provinces for funding development proposals for the agricultural sector that are proposed and prepared by the provincial agencies, which is a positive aspect of the program. Recently the Sindh Department of Agriculture has submitted proposals for projects concerned with research and extension to be funded from the program. This approach has good merit as it allows the provincial administration to establish their own priorities and have ownership of the projects, provided that they comply with the national objectives and support the policy reform process. These and similar initiatives to revitalize agricultural research and extension have resulted in the provincial governments and other stakeholders having greater commitment and support for reform.

64 210. So far in the implementation of ASPL II, the performance and output of the consultants concerned with developing proposals for the revitalization of extension services and research is disappointing, and the output of the Package A consultants concerned with various special studies, in the opinion of the evaluation team is poor. Unfortunately the appointment of the Package B consultants has been delayed and some of the original studies need to be replaced by more relative studies. TA resources have not been utilized effectively to carry out the monitoring and evaluation functions consequently the M&E component has not been implemented satisfactorily: benchmarks were not established, and monitoring is output focused rather than outcome focused. 3. Recommendations

211. Program loans can influence policy and government reforms through the conditionality linked to the release of funds, but only when government is in agreement and committed to the process.54 Good progress has made in APL-I and ASPL II with the reduction of government involvement and influence and pricing and marketing of agricultural commodities, but they will they will still be unfinished business after ASPL II as reform is a long-term process. The forthcoming agricultural sector strategy TA is expected to identify further reforms and strategic direction for the sector that could be included in a third agricultural sector program loan. 212. With respect to future policy reforms to be pursued by ADB, the evaluation consultant agrees with the conclusion of the PPAR of ASPL I in that they should be specific, prioritized, and focused on a few specific and relevant issues pertaining to ADBs strategic objectives in the country. Furthermore, as stated in the PPAR, the central thrust of any future program should be on a greater reliance on market forces and reforms that aim to correct distortions, such as the removal of subsidies and increase agriculture operational efficiency. An important lesson is that implementing a program in a highly traditional society (with politically well-connected landholders and vested interest groups) and in a country with poor governance, requires a stepby-step approach and a long-term commitment. It would be better to disburse the loan over a longer period, with disbursement conditional on introducing and implementing reforms that would lead to market liberalization. The program should have more flexibility to allow adjusting to changing circumstances and needs and the provinces must be fully involved and committed. 213. The monitoring and evaluation of project performance activity under the ASPL II needs to be strengthened and should cover strengthening of the provincial project monitoring sections within the provincial agriculture departments. F. Overall Program Assessment

214. This section covers the whole program evaluation. First a summary of the EIRRs from appraisal, PCR and PPAR documents for the three subsectors is discussed. Second, there is an analysis of the specific questions related to the strategy and the quality of the program, and third, the whole of program is evaluated using the 20 criteria to be applied as indicated in the methodology. Overall, the performance of ADBs operations in the ANR sector is rated as
54

The influence of aid on policy reform and the effectiveness of conditionality on influencing policy was investigated in a recent OED working paper Development Effectiveness What Does Recent Research Tell Us (ADB OED working paper no. I, 2004. The review of the literature on the subject concludes that conditionality does not work and has proved to be largely ineffective. Conditionality does not work unless there is strong domestic support for reform. Obviously the effectiveness of conditionality can be improved by fostering ownership of policies by recipient countries and international funding agencies now endeavor to build their aid programs around the Poverty Reduction Strategy Papers relevant to the recipient country.

65 successful but bordering on partly successful. According to the evaluation of past and present projects, 51% are successful, 44% partly successful and 5% unsuccessful.55 1. Summary of EIRRs

215. A summary of the EIRRs extracted from the appraisal and evaluation documents RRPs, PCRs, and PPARsfor loan projects for the three categories of projects is presented in Table 25. The table notes where this information was not available or was not calculated. For rural development projects the EIRRs predicted at the time of project preparation and presented in appraisal documents and RRPs range from 13% to 27%. The four PCRs indicated a lower EIRR except for the Chitral ADP where the PCRs EIRR was 19% compared with 13% for the appraisal. The two projects that have a PPAR both recalculate the EIRR significantly lower than the RRP. For water resource projects the performance ex-post is closer to the appraisal estimates, and for one project, the Chashma Command Area Development Project (1986 1995), the EIRR calculated in the PCR actually exceeds the appraisal estimate. Several projects in this subsector do not have an estimate of EIRR, particularly for loans for flood protection and rehabilitation where the loan proceeds are applied for many subprojects that were identified, designed and implemented during implementation. PCR and PPAR estimates for a sample of subprojects do however indicate EIRRs that exceed 10%. Projects in the other category have had a more mixed performance with several projects showing very low EIRRs in the ex-post evaluation documents. For the program loans to the agricultural sector and the forestry sector development project EIRRs were not calculated. As has been mentioned in other documents,56 cost-benefit analyses of proposed projects often report robust economic returns, but ex-post analyses of completed project show much lower actual rates of return. This work showed that the rates of return for post-evaluated projects between 1990 and 1994 for a range of ADB projects were lower in 74% of the projects. Most ADB projects in Pakistan reflect the same lower performance ex-post. Although ADB has moved away from the approach of an overall project EIRR for more recent ANR and rural development projects to a more specific analysis of subprojects and distributional impacts, for the projects listed in the table the EIRR is the primary measure of economic efficiency and it is relevant to compare ex ante to ex post performance. However a more detailed distribution analysis of the benefits as part of the evaluation exercise may help quantify other significant developmental impact. Table 25: Summary of EIRRS
Subsector and Project A. Rural Development Projects i. Gujranwala Agricultural Development Project (19851994) ii. Chitral Area Development Project (19871997) iii. Second Barani Area Development Project (19901998) iv. NWFP Barani Area Development Project (19922001) v. Malakand Rural Development Project (1996ongoing) vi. Bahawalpur Rural Development Project (1996ongoing)
55

RRP 27% 13% 24% 25% 19% 16%

EIRRs PCR 17% 19% 10% 12.90%

PPAR 7% 4.10%

By comparison the World Banks Pakistan County Assistance Evaluation (report no. 34942 17 Feb 2006) for the period 19942003 assessed the performance of the Agriculture/NRM sector as unsatisfactory with the comment that: Agriculture production has increased, but yields remain low and water use is inefficient. Rural poverty has not improved, as land inequality has increased, and access to other key inputs such as water and credit remains unequal. The report is available from <www.worldbank.org> 56 Richard Bolt. 2005. Improving the Relevance and Feasibility of Agriculture and Rural Development Operational Designs: How Economic Analysis Can Help. Asian Development Bank ERD Technical Note Series. Manila.

66
EIRRs PCR

Subsector and Project vii. Dera Ghazi Khan Rural Development Project (1996ongoing) viii. NWFP Barani Area Development Project (II) (2000ongoing) ix. Sindh Rural Development Project (2002ongoing) x. Sustainable Livelihoods in Barani Areas Punjab (2004ongoing)

RRP 23% 19%

PPAR

18% Range of 1336% for subprojects clustered around 20%. Overall EIRR not calculated. 16% 13% 12.6% and 13.6% (no average) 30% nc 12.40% 16.10% nc not available nc 24.20% nc 13-30% 13-28% FIRR 38.6%, EIRR 41.41% nc nc 26.30% 20.2% 10% (6%) 10.09% 12.64% and 10.4% (average 9.3%) 19.50% +10% (sample) 13.10% 14.40% nc nc 17.50% nc FIRR 11.45%, EIRR 10.3% subproject sample EIRR range 2467% nc 13.60% EIRR negative

B. Water Resources Projects i. Small Dams Project (19851996) ii. Pat Feeder Canal Rehabilitation and Improvement Project (19852000) iii. Balochistan Groundwater and Trickle Irrigation (19861996) iv. v. vi. vii. viii. ix. Second On-Farm Water Management (19871995) Flood Protection Sector Project (19871999) Chashma Command Area Development (19861995) Swabi Salinity Control and Reclamation (19892000) Flood Damage Restoration Project (19891993)

7.50% 27% 6% + nc (varies) nc EIRR near zero

Chashma Right Bank Irrigation Project (Stage III) (19912005) x. Flood Damage Restoration (Sector) (19921999) xi. 3rd Punjab OFWM Project (19942002) xii. Marala Ravi Link Canal System (19941998) xiii. National Drainage Sector Project (1995ongoing) xiv. Second Flood Protection Sector (1997ongoing) C. Other Agriculture and Natural Resources Projects i. Cotton Development Project (19861999) ii. Second Agricultural Development Bank of Pakistan (19861995)

iii. Agricultural Inputs Program (19861989) iv. Fruit and Vegetable Marketing Project (19871996) v. Livestock Development Project (19891999) vi. Second Aquaculture Development Project (19922001)

FIRR 24FIRR 2250+%, EIRR 50%, EIRR nc 24.8% vii. Agricultural Credit Project (19901994) nc nc viii. Agriculture Program Loan (19901994) nc nc nc ix. Forestry Sector Project (1995ongoing) nc x. Sindh Forestry Development Project (19912002) 20% 9% xi. Agriculture Sector Program Loan II (2001ongoing) nc = not available, EIRR = economic internal rate of return, FIRR = financial internal rate of return, nc = not calculated, NWFP = North-West Front Frontier. Source: Asian Development Bank documents.

67 2. Strategy Assessment

216. The objective of this report is to answer two general questions with respect to ADB operations in the ANR sector: (i) were the right things done? and (ii) were things done right?, with an emphasis on the resource allocation question in the first question as it relates to the allocation within the sector. This aspect is compounded by the range of subsectors with the ANR sector and lack of connection between some subsectors. 217. Particular issues that the evaluation of the ANR sector is designed to address and answer are listed as follows: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) 218. What strategies were pursued for utilizing ADB resources? How were strategic choices made? Were these choices sound in terms of the evidence available (or could have been available through analysis) at the time they were made, and in light of the results of those decisions? What was the relative influence of the various elements of strategy on the program? What was the quality of ADBs formalized country strategies? Irrespective of strategy, what was the quality of the program? Were the choices made by those managing the program the right ones for managing results attainment? How have the sectors and their institutions supported by ADB operations performed? In what ways may ADB resources have contributed to these sector outcomes, or not as the case may be? Was there effective synergy between ADB resources and those of others? How can choice selection and decision making process be improved in the future?

These questions and answers are discussed in the following section. (i) Strategies pursued for utilizing ADB resources. The allocation of resources conformed to ADBs overarching issues concerned with poverty reduction, sustainability, the environment, decentralization, and devolution of responsibility and the development of the public-private sector partnerships. How strategic choices were made. These were influenced by the past historical engagement with the Government with a tendency to rollover investment in a sector or subsector from what has been funded previously and historical allocation between sectors and lending targets. The performance of loans also influenced choice, for example the poor performance of the livestock development loan precluded further investment for livestock and disenchantment with the performance of the irrigation sector reforms resulted in a reduced allocation to water resources. Within the ANR sector strategic choice is also influenced by ADBs objectives of poverty reduction, support for economic reform, decentralization and reduced public expenditure, which in turn is influenced by international trends and emphasis on supporting the role of women and reducing poverty. Overall funding for the ANR sector was also affected by the increased emphasis given to social sectors in 2002 when the ADB increased support for devolution, good governance and law and order. Some strategic choices were opportunistic-

(ii)

68 such as restoration of flood protection infrastructure following floods in the early 1990s. Were the choices sound. Overall it can be concluded that the funding choices within the sector were generally sound at the time, and in tune with the governments priorities. However, in terms of overall strategy the program can be criticized for trying to cover too many subsectors, a lack of continuity and as a result, insufficient technical expertise to provide technical support and insufficient resources for project support and supervision. In some cases there were flaws in the underlying development model, and a failure to learn from past lessons, including slow adaptation to the reality of the advent of devolution to local government when it did occur late in the 20-year evaluation period. With the benefit of hindsight there are some projects whose performance is not successful: poor performance can be attributed to several factorsbad design, poor implementation, and changed economic circumstances and external effects. It seems that the strategic choice was not supported by an analytical basis for decision making through an effective strategy and assistance plan for subsectors and for some projects implementation fell short of the plans. Relative influence of elements of strategy. The influential elements varied over the period but the overriding influence on strategy for the later part of the review period was the objective of poverty reduction. From the late 1980s the program of assistance to agriculture became more focused and concentrated on RDPs, while in the 1990s the focus moved to sector specific policy reforms funded by a program loans. Other influential factors were the emphasis on sustainable pro-poor growth, participatory processes, devolution of responsibility and cross cutting themes such as environment and private sector development. Gender and equity issues, although stated as important cross cutting issues, especially in the latter part of the evaluation period did not have a big influence on the overall strategy. Quality of ADBs formalized country strategies. In general ADBs strategies are bland, general unambiguous statements that lack detailed sectoral analysis as a basis for a long term road map and investment program. Although ADBs strategies for development have been generally aligned with Governments strategies some aspects of CSPs tend to reflect ADBs strategies and priorities to influence development (particularly for private sector market-led development, gender and environmental issues) rather than Governments priorities as ADB pushes government in a certain direction and leading to, for example, the necessity of having loan conditions to keep the pressure on to implement reforms. Some programs such as the support for rural area development were not mainstreamed into provincial and federal government investment programs and represent piecemeal oasis-like solutions to problems. On the other hand the IPM program which has the support of government as a nation-wide program was down-played by ADB. Irrespective of strategy, what was the quality of the program? The performance and quality is varied as evident by the generally less than envisaged economic performance, (as indicated by the EIRRs for those projects that have been evaluated ex-post). However outcomes cannot be reliably substantiated for some subsectors because of a lack of qualitative data on which to measure the impact. Some projects were too ambitious, too complicated, too time bound and not compatible with the capacity of the

(iii)

(iv)

(v)

(vi)

69 implementing agency. It appears that there has been a low level of learning from prior experienceas projects are usually prepared by consultants there is not always a lot of consistency in the approach and design. Although ADB monitors and reviews consultant activities during PPTAs, the driving force for project conception and design usually emanates from consultants rather than ADB staff or the Government, who are more involved during appraisal and loan processing. Newer projects for rural area development repeat former designs and there has been little innovation and remodeling based on an analysis of performance of previous projects. Generally there has been a lack of integration and synergy between projects and between line agencies. Were the choices made by program managers the right ones for managing results attainment? There has been a wide variety of projects and performance. Overall, the results of subsector performance in terms of outcomes and reforms for agriculture, forestry, and water resources were limited, which would indicate that managerial choices where not always the right ones. On a positive note ADB has maintained engagement with the important subsectors of water resources, agriculture and rural area development. ADBs program managers choices were also limited by the available resources for supervision and management, which if this situation continues, would suggest that there is a need for a rationalization of how they are used. The results obtained were also a reflection of both standards of implementation and the project design, factors that are mostly beyond the control of the program managers. Performance of sectors and their institutions. The water resources sectors institutions performance has been weak and not proactive with a lack of firm commitment to the transition and reform process, although more recently the position has improved. In the other category of ANR subsector, for forestry, implementation of institutional reforms has been slow, and initiation of public-private sector partnerships not yet started. Livestock institutions have limited capacity for non-veterinary activities and have not improved as a result of ADBs programs. ADBs strategy to modernize agriculture through support for post-production and value-added activities has only recently started and it is too soon to assess its impact. Institutional reform in the agricultural sector has achieved positive results with trade liberalization, free market pricing policy and unrestricted movement of food grains being applied, but there is a difference in commitment between the federal level and the provinces, which have to deal with the negative aspects. A positive aspect is that there is ongoing engagement with MINFAL plus a forthcoming modernizing project. Overall the ANR sector is poised for further growth and development and is in a better position now than at any time in the last two decades to perform: some of which can be attributed to ADBs support and the performance of the institutions. However external factors like weather and international prices can have a major effect not to mention the importance of a stable economic and political platform. However not all institutional staff espouse a commitment and ownership to the transition and reform process. More work remains to be done and ultimately progress will rely on a changing of the guard as younger staff progress through the institutions and modernization and restructuring processes are permanently established. Ways that ADB has contributed to sector outcomes. In the RDPs category outcomes have been limited, dispersed with unproven longer term

(vii)

(viii)

(ix)

70 sustainability. ADB programs have contributed to infrastructure, capacity building and community empowerment through participatory processes, although there is some doubt about the actual effectiveness of the participatory process, and it can be at the expense of by-passing local government. The sustainability of small-scale infrastructure such as irrigation schemes that are managed by the irrigators is more assured than larger schemes that are the responsibility of government and suffer from insufficient O&M. ADB has contributed to some success in the reform of the forestry sector and watershed management, but it is still too early to make a full assessment of the outcome. In the water resources subsector ADB has created increased awareness of irrigators rights and contributed to empowerment and the transition to farmer management. In the flood sector ADB projects have made a positive contribution to physical infrastructure that will confer significant flood protection outcomes, but this is less than the potential, because of political influence and the unsatisfactory performance of the implementing agency. Synergy between ADB and other resources. Cofinancing of NDP with World Bank and JBIC complemented the projects and provided synergy although the end of the World Banks involvement after the completion of its funds disbursement did cause problems for ADB. The involvement of IFAD and the Islamic Development Bank with RDPs and FAO for the implementation of IPM was also a productive relationship with the other agencies bringing more expertise and backstopping. Synergy between ADB and the government resources responsible for implementation has been variedprojects have been delayed because of delay in allocating counterpart funds, appointment of project staff and failure to meet loan conditions and lack of commitment to implement reforms. In the water sector, policy and institutional dialogues are increasingly harmonized amongst external financiers. ADB has had policy dialogue to the World Bank on water management issues and reform and there is an accepted division of responsibility between ADB and the World Bank with ADB working in NWFP and concentrating on institutional support for strengthening water user associations. ADB has had limited synergy with the private sector (in fairness mostly because for much of the evaluation period it was not conducive under the Governments policy environment at the time), but has had synergy with NGOs, especially in the implementation of RDPs. Ultimately it should not be the responsibility of ADB or another funding agency to ensure synergy and integration: this should be the function of Governments planning institutions. How can choice selection and decision making process be improved. By restricting ADBs support to fewer areas of focus and committing to invest in a sector for the long term according to a roadmap derived from sectoral analysis and by maintaining continuous dialogue with the responsible institutions. The subsector selection process should recognize the will and commitment of Government as a necessary condition and promote sufficient dialogue to foster commitment. Projects should target sectors where the government is already committed and provide support finance to upscale the activity. The ADB should target projects to discreet areas first and scale up in a second stage as part of a serial project process where the intervention is first tried and tested and expanded after successful outcomes have been proven. Supporting TA should be given for sector studies, review and analysis of past projects and comparative advantage studies. In particular a

(x)

(xi)

71 sector plan for agriculture, the implementation of a water sector master plan and apex planning body and a review and analysis of the rural development sector are a priority as a means to provide better information to support resource allocation and funding. 3. Whole Program Evaluation

219. This section presents the evaluation in terms of the whole program where the quality of ADBs program is assessed over the entire 20-year period of 1985 to 2005 using the 20 criteria developed by OED.57 An overall assessment for the combined sector is shown in Table 26 at the end of this section. 220. The performance of ADBs support to ANR through the 43 loan projects and 77 TAs during the last 20 years covered by the evaluation has been variable and there are few bright stars amongst the portfolio. Overall the sector is rated at 39%, with a range of 38% for rural development, 44% for water resources, and 35% for other. 221. The analytical basis was rated as low for the three categories of projects. Despite extensive use of project preparatory TA and advisory TA, analysis of the available information on which to underpin the program has, in general, been inadequate. There has been a lack of innovation in the application of alternative means and technology to achieve results. In terms of balance of the program (among lending, TA, policy dialog and implementation support and supervision) the program is rated low for agriculture and moderate for rural development and water resources. As is common with other sectors there has been an emphasis on lending at the expense of engagement and policy dialogue and there was insufficient ADB staff resources for supervision and support, which is some cases has led to greater problems developing. The continuity of the program was assessed as moderate for rural development and water resources but low for the other category. ADB has been engaged with supporting rural development through multisectoral area development projects since the 1980s and has had continuous engagement with the water sector since the start of its lending program in Pakistan in the 1970s. Assistance to the agricultural project in the other category has been more piecemeal and there has been virtually no continuity in support for any subsector, except for the two program loans supporting reform and restructuring. The geographic spread of the program has shown continuity with support for all four provinces. The credibility of the program was rated as moderate for all three sectors. ADB is widely recognized as a major multilateral financing agency with influence and the resources to make change. Credibility would be further enhanced through having more capacity for support and supervision in PRM and able to rely more on inhouse staff instead of consultants. Some projects were too ambitious and complex and poor performance undermines credibility. 222. In terms of critical mass the assessment is low. ADB can make a significant impact but the enormity of the sector means that its program cannot achieve the desired sector-wide outcomes in a realistic time framework. For example, it is already a decade since the NDP was approved by government with its objective of institutional reform and it is likely to take many more years to complete the transition of the irrigation sector to farmer management. The application of IPM to all 1.3 million cotton growers is a mammoth exercise. Assistance should be
57

The 20 criteria are analytical rigor, balance, continuity, credibility, critical mass, demonstrated learning, efficiency, flexibility, impact/results, innovation, needs-based, partnership, playing to strengths, political awareness, responsiveness to opportunity, results-management, selectivity/focus, sustainability, synergy, and value-for-money. The program was rated as low (score of 01), moderate (score of 23), or high (score of 45) on each criteria.

72 more targeted to maximize effectiveness. For demonstrated learning the overall assessment for the three sectors was low, although there have been some shifts from federal umbrella projects to provincially targeted projects, and to program lending in agriculture. The same model with some variations has been applied for rural development where a critical evaluation of the experience and outcomes to date could have resulted in a more productive approach. The efficiency of the program was assessed as low for rural development where economic and financial results indicate lower than predicted returns, while for the water resources and other categories efficiency is assessed as moderate. Ex-post project evaluations for irrigation have indicated acceptable economic returns. A similar situation applies for the other category. 223. Flexibility is rated as moderate across the sectors. Similarly impact and results are also assessed as moderate. Most projects achieved their planned outputs in physical terms, eventually, as normally there were extensions, although the sustainability of the infrastructure and their resultant outcomes is doubtful in many cases. Innovation was rated as low for rural development and other, and moderate for water resources. The basic rural development model remains the same since the beginning of support to this subsector. ADBs ANR program has failed to engage with the driving force of the private sector and agri-business. In water resources ADB has been instrumental in supporting major reform and innovation, albeit with mixed results. In the future innovation in the linking of development assistance to the new devolved local government structure and support for public-private-partnerships will be required. In terms of being needs-based, the program was rated high for rural development (where communities are mobilized to prioritize their needs) and moderate for water resources and other agriculture. The higher rating for rural development is a reflection of the adoption of participatory methods to give voice to stakeholders needs, (although it debatable how meaningful this was compared to other conventional processes). The assessment of ADBs partnership with other agencies and funding agencies was moderate. There has been mutual benefit in working with IFAD, FAO, JBIC, and UN agencies, and although the involvement with the World Bank in the NDP was not so beneficial, this should not preclude other cooperation. More use could be made of partnerships especially where a bilateral partner is able to provide grant-funded TA for project implementation and supervision which enables a greater level of support and engagement. 224. With respect to playing to ADBs strengths, rural development was rated low, high for water resources, and moderate for other. This is a reflection of the assessed comparative advantage ADB possesses in these areas and its institutional history of support and work. Overall the program was assessed as moderate for political awareness. Support has recognized the political economy, but not to the extent of always acknowledging the full measure of constraints to reform and the immovable elements in the natural resources sector. The test in the future will to be adapting to the new role of the local government administration. Support for the sector in response to opportunity is judged to be moderate. ADB has responded to needs after flood emergencies and the opportunity for policy- based lending to the agriculture sector when government was favorably inclined to borrow to instigate reforms. However the application of new lending models in response for opportunities for lending to the private sector have been slower to materialize. 225. With respect to results management the overall program is rated low for all sectors. ADBs focus is on disbursement and compliance with implementation rather than on the delivery of sustainable development results. Success tends to be measured by outputs and targets reached rather than outcomes. Government counterparts are not always highly motivated to achieve results and are often constrained by their self-interest and the bureaucracy. Successful projects require a champion to drive them. The selectivity and focus of the program is rated as high for rural development, where there is a concentration on targeted support for specific

73 areas, low for other agriculture where a variety of project types have been funded, and moderate for water resources where there is recognition of ADBs strengths and weaknesses and the need for reform. Sustainability is assessed as low for rural development, and moderate for other agriculture and water resources where interventions are expected to continue to have a long term impact. For synergy among sectors, rural development and other agriculture are rated low, while water resources are rated as moderate. The achievements in a particular part of the water sector are expected to have more synergy with other parts. Overall, the value for money of the program for rural development is assessed as low, considering the relatively high level of expenditure per capita, the lower than envisaged economic and financial returns, and risky sustainability, while for the ANR sector in general the wider payoff from successful reforms on affecting peoples lives, increasing livelihood and reducing poverty are considerable. Reform of the water resources sector will also have a far reaching effect. 226. On the whole performance has been slow on account of several factors, primarily cumbersome administration and slow decision makingimplementation delays, delays in recruitment of consultants,58 appointment of project staff, and procurement. The stream of assistance does not seem to be directed by any overall long-term strategy of support and recognized need for long-term commitment. In general, however, ADBs program has matched and conformed to the ADBs overall strategy and the Governments development strategy and needs as they have changed according to the economic and fiscal situation over time. 227. Implementation performance on behalf of government has been varied and is closely related to the caliber, competency and commitment of the staff involved. Where projects have had a champion committed to implementation, achieving results and making reforms there has been more success. For example, the commitment and enthusiasm for irrigation reform expressed by the Secretary of the Punjab Irrigation Department has been the driving force for recent progress in that province. 228. Support has been provided to rural development in one of several guises since the mid 1980s with the objective of reducing poverty and increasing rural livelihoods in poor rainfed areas. While there has been consistency in the strategy in supporting this sector over period, no review has been done to consolidate the findings and experience gained from the various projects to use for preparing more effective and efficient projects. It would appear that the full value of experience and expertise, including that of bilateral agencies has not been taken advantage of during project preparation. In addition, there has been a lack of synergy and sharing between the line agencies supporting the different sectors. For example, the development of new dams and irrigation facilities in the small dams project has not been matched with the corresponding requisite support for agricultural development from the Department of Agriculture. 229. The sum of the whole is not necessarily greater that the sum of the parts. The outcome of one subsector has not necessarily contributed to a greater output from another sector. There has been a lack of integration between agriculture development and physical irrigation works as noted above. Future programs should aim to build on the synergy and serial benefits. For example, projects should favor areas where farmers organizations have already been established and subsequent projects should concentrate on locations where progress in reform has already been achieved and so have a more assured outcome.

58

An analysis in 2004 showed that recruitment of consultants for agriculture and natural resources loan projects almost invariably took more than 12 months from loan approval.

74 230. Part of the poor progress can be attributed to inadequate project design, which did not take into the account the capacity of the agencies involved, especially provincial agencies responsible for flood protection works, and the split in attitudes and responsibilities between the centre and the provinces. Some aspects that contributed to this situation include (i) project too ambitious and too demanding on the implementing agency; (ii) complex implementation and institutional arrangements; (iii) unrealistic conditionalities in a time frame that could not be met; and (iv) insufficient supervision by ADB and slow response to issues. Table 26 evaluates ADBs country strategy for Pakistan operations. Table 26: Evaluation of ADBs Country Strategy Documents for Pakistan Operations
Criteria Analytical Rigor Balance Continuity Credibility Critical Mass Demonstrated Learning Efficiency Flexibility Impact/Results Innovation Needs-Based Partnerships Playing to ADBs Strengths Political Awareness Responsive to Emerging Opportunities Results Management Selectivity/Focus Sustainability Synergy Value-for-Money
Source: Consultants evaluation.

Low

Rating Moderate

High

VI. A.

CONCLUSIONS AND RECOMMENDATIONS

Conclusions and Lessons Identified 1. Introduction

231. This section presents a summary of the main conclusions lessons identified from the evaluation. A common element to most projects and programs is the delay in startup and implementation caused by the delay in the preparation of Planning Commission Proforma number 1 and number 2 (PC-1s and PC-2s), appointment of project staff by the IA, setting up PIUs, procurement of necessary equipment, and engagement of consultants. Routine progress and impact monitoring and evaluation are generally weak in most of the sector institutions, which reduces their capacity for reactive management and the quantification of project outputs and outcomes. The lack of increased provision for ongoing O&M for infrastructure constructed by projects which becomes the responsibility of government also affects long term sustainability and will impact on longer term benefits and outcomes.

75 a. Rural Development

232. Generally, the performance of interventions in this area is assessed as only partly successful. Low achievement is compounded by delayed startup, difficult implementation, lack of credit and unlikely sustainability. Inadequate M&E and lack of information makes it difficult to quantify project impact and outcomes but generally they are expected to be significantly less than anticipated. As the projects involve many stakeholder groups and are usually located in areas where there is more limited economic potential and institutional capacity. Despite limited institutional capacity, RDP implementation arrangements are usually complicated and require more support for successful outcomes. RDP projects emphasize broader social objectives that tend to be undervalued when performance is measured by EIRR. Nevertheless the main issue is their lack of sustainability. Reasons for this include flaws in the RDP model (namely, that the solution to rural poverty resides in the area where it occurs [see also para. 233]), the superficiality of the community empowerment process, the by-passing of the local government systems, and inadequate O&M. The latter is an ongoing problem. There are several factors at work, but the basic reason is the lack of funding provided for recurrent O&M expenditure. Government resources for recurrent expenditure are limited and often the more readily available access to large amounts of development capital through development loans for rehabilitation substitutes for regular maintenance expenditure, which if it were carried out regularly would have a much lower overall cost. Addressing the O&M problem should be included in the project design. ADB procedures and operation guidelines do highlight the need for a complete analysis of the impact of the proposed project on the fiscal economy and the recurrent budget and how this should be included in the feasibility study. More attention should be placed on the impact on O&M during the project design stage and this aspect used as a criterion for project feasibility. Rural development type projects could require the participating communities to make more commitment to finding O&M by introducing user pays type arrangements or the imposition of local taxes to provide more revenue (another reason why RDPs must involve local government, which have the power, although not always the will, to levy local taxes). 233. RDPs have all been designed using the same basic model of a time-bound, area specific target driven approach with some variation in the executing arrangements and components for almost two decades. Over this period, their limitations have been exposed. Clearly, there are multiple and often interlinked development needs in poor areas. Equally clearly, community members need to have the opportunity to express their preferences and to fully engage in the development process. But there has been little innovation in the model of multi-implementing agency, limited range of output classes funded and the means for gaining community participation. Despite recognition and accommodation in recent project design of the need for new approaches to address complex social and institutional issues and to engage local government, there is an urgent need to review the body of knowledge on rural development, and initiate a cross-learning and sharing of experiences among development practitioners and stakeholders with a view of defining an approach that is likely to have a greater chance of success and sustainability. 234. A two pronged approach could be appropriate: the use of an RDF that would provide funds for schemes proposed by union councils and tehsils (subdistrict units of administration) supported by capacity building for elected local government, local government officials and the various accountability entities set up under the Local Government Ordinance of 2001. Provided the necessary definition of a new approach takes place and the Government wishes to borrow for rural development, ADB should continue to remain engaged. Ultimately, the scale of the ADBs support to this sector in the future will depend on the level of ADF funds available, unless the Government is prepared to blend OCR funds.

76 b. Water Resources

235. Water resources underpin the main productive sector in the economy as most agriculture production relies on irrigation and drainage. There is a huge public and private investment need (estimated at several billion) so there is considerable potential for a major lending program for the foreseeable future. However, this will depend on concrete moves on needed reforms. (i) (ii) (iii) ADB should support water resources as a core part of its lending portfolio. The emphasis should be on irrigation rehabilitation and reform. Development of small dams is a lower priority investment because of unfulfilled potential and narrower economic impact. Interventions should explore opportunities for lower cost and smaller scale projects, such as community-based storage facilities managed locally, and opportunities for equity contribution and capital cost recovery from larger landowners who receive higher private benefits from irrigation development. The track record for flood protection through the program approach is not so successful. The formation of sub-projects is delayed, feasibility studies are not done to a high standard and project allocation is subject to political interference. ADB should support cost-effective, affordable and sustainable ways to manage flood problems, as apposed to interventions on a piecemeal and ad-hoc approach as in the earlier flood protection projects. Future ADB assistance should focus on high priority flood protection structures for discreet well defined parts of the river system, non-structural flood protection measures including flood forecasting, and institutional strengthening clearly defined under a flood management strategy and programs. Support to capacity building for provincial water sector planning and policy authorities is important for regulation and distribution of water resources including ground water. Umbrella projects that are federally administered and cover several provinces have been less effective (because of the more complicated administration and lack of provincial ownership), and future assistance should concentrate on focused province-based projects. Irrigation rehabilitation and management projects should, where possible, concentrate on one canal system or a discrete part of the water distribution system.

(iv)

(v) (vi)

(vii)

236. An important issue for ADB is how strongly should its support to the sector be tied to irrigation reform. The commitment of the Government to irrigation reform and the ability of the Government to deliver on its reform objectives are not certain. It may take many years to undertake complete reform of the sector to modernize the institutions and complete the transition to farmer managed irrigation, although this need not be the case of someone with power and influence wishes to make it happen. There are considerable political and administrative barriers to the reform process from the two major players. First, the main institution involved, the Irrigation Department, has a vested interest in maintaining its power and revenue base as manager of irrigation and drainage. Second, politicians often represent the interests of large owners who would be the losers under reform. Therefore, neither the Irrigation Departments nor provincial governments are likely to be the drivers of reform. Irrigation reform requires political will, which has to come from high levels in the federal government.

77 237. Illustrative of the problems faced is the reality that none of the water sector policy plans that have been prepared with funding agency support in recent years has been formally accepted and approved by Government, although partial endorsement was indicated by government in setting up PIDAs, area water boards and farmer organizations. Despite the assistance provided by the ADB and the World Bank, there is no coherent government strategy for the water resources sector. Government has to demonstrate its resolve and commitment for reform to be carried through. The ADB has to move on from the experience of the NDP and to reconsider its role in the sector. Support should consistent with a long-term sector plan or roadmap, with a practical sequence of reforms, institutional support and capacity strengthening and investment programs, funded in partnership with government and other external funding agencies. A hard line approach linking intervention to reform may leave the ADB out in the cold, particularly if other funding agencies are not as demanding in linking investment to reform. The middle ground would be for ADB to regard the reform process to be the ultimate responsibility of Government to be done in its own time, and to continue to fund aspects of the water system infrastructure that are not directly related to the reform, such as rehabilitation of major canals and barrages, and construction of new dams. Funding of tertiary and on-farm works could be linked to systems were transition has already been carried out or where there is a clear commitment to the process and reasonable progress has been made. c. Other Agriculture and Natural Resources

238. Program Loans. These are an important component of the portfolio as they can direct policy and reform for structural change in the sector in accordance with macroeconomic strategy. They can be designed to provide incentives to undertake reform through the conditional release of funds linked to compliance by government, although recent research has highlighted the ineffectiveness of conditionalities in forcing governments to comply. (i) (ii) (iii) They need clearly defined objectives phrased as expected results (impacts, outcome and outputs). Alternatives need to be considered. Provincial and local governments must participate as equal partners and it will be important to adequately consult with the provinces and take into account the implication of the new devolved structure of district and tehsil governments, and the possibility of funding these institutions directly. Capacity building for federal and provincial agencies in topics such as sector analysis, M&E, policy analysis, and project preparation is important, especially as the quality of consultants outputs is variable. Bulk funding for provincial institutions for agricultural sector development project reform, such as the funding for agricultural research and extension projects that in included in the Second Agricultural Program Loan, is a positive aspect. Future program loans could support priorities such as government regulatory functions, fertilizer, agrochemicals and seeds quality control, crop estimation and national MIS, support for diversified export of fruits and vegetables and development of public-private partnerships.

(iv) (v) (vi)

239. Forestry and Conservation. These are considered a low priority for ADB but there is scope for private sector investment through private-public partnerships in the forestry sector if property rights issues can be resolved. The conservation sector has limited potential for major investment by ADB and should not be part of the future program. The national conservation strategy may need revision according to more recent guidelines which could be supported by bilateral assistance.

78 240. Livestock. The one and only ADB loan had very poor performance and has tainted the development agencies against further interventions for infrastructure and for supporting public sector provision of livestock services. The livestock sector makes a significant contribution to the agricultural sectors GDP and livestock are important to the livelihood of rural communities as an integral part of the farming system, especially for the poor in rainfed areas who rely on livestock for nutrition, income, capital appreciation and insurance against risk. Most of the RDPs include support for livestock and these interventions have had some success in improving rural livelihoods. Commercialization of livestock can be supported through developing economies of scale through setting up cooperative marketing structures and developing upstream connections with markets and processors. There is scope for agribusiness development for livestock through the agribusiness project (Loan 2171) and the wider application of the FFS enterprise management extension approach is also applicable to livestock. Development of private sector service providers of extension and veterinary services should be a priority. However direct support for public sector investment in the livestock sector by ADB is not recommended, and interventions for discreet project should be left to bilateral donors and other development agencies. 241. IPM. The earlier work on cotton IPM has demonstrated that this approach has considerable potential to revitalize rural extension and empower farmers through FFS. Government has indicated its commitment through the initiation of a nation wide program broadened to other crops and sectors with the likelihood of this approach being integrated into mainstream agricultural extension services. The Government has requested further TA from ADB for capacity building and training to expand the FFS and IPM approach but at this point there is unlikely to be the need for major public investment funded by a loan, although the replication of IPM to the 1.3 million cotton growers in Pakistan, and for other agricultural and livestock activities will require a major investment over a long time frame. Subject to a clear indication of the Governments intentions and request for a loan, the ADB should consider funding a loan and TA of $50 million as a first phase of the program. 242. Agribusiness. This is an important sector for meeting Governments objective of private sector-led agribusiness for achieving economic growth and poverty reduction objectives to enhance rural incomes and help diversify the rural economy. A successful outcome of new ADB project for agribusiness development will help demonstrate how effectively MINFAL can engage with the private sector, and influence further need for public sector investment and the level of any future support from ADB. B. Corruption in Pakistan

243. Pakistan has the unenviable reputation of being a corrupt country. The 2005 Transparency International Corruption Perceptions Index59 ranked Pakistan as 144th in a list of 159 countries included in the annual survey by the Berlin-based organisation. On a scale of 10 (squeaky clean) to zero (highly corrupt) Pakistans CPI score of 2.1 is well below the threshold level of 5.0 that Transparency International considers as the borderline score that distinguishes countries that do or do not have a corruption problem. Pakistans relative rating has not changed significantly in recent years. ADBs definition of corruption is stated in the Anticorruption Framework Policies and Strategies as the abuse of public or private office for personal gain. Corrupt practices are generally accepted as having a negative effect on the economy through distorting the allocation of resources away from productive investment and
59

"The 2005 Transparency International Corruption Perceptions Index." Infoplease. 20002005 Pearson Education, publishing as Infoplease.06 Nov. 2005. Available: <http://www.infoplease.com/ipa/A0781359.html>.

79 further enriching the rich, and powerful. It undermines the civil service merit system and breeds public cynicism and resentment toward the political process and those in control. Internationally, the cost of corruption is considerable. 244. A report on the extent of corruption in Pakistan was prepared by Transparency International Pakistan in 200260 based on a sample survey of households in the major cities. The general objective of the survey was to measure the nature and extent of corruption being faced by consumers of seven public sector departments: education; health; power; land administration; taxation; police; and the judiciary. The report concluded that corruption was widespread and that the main reasons for corruption were lack of accountability, low salaries and monopoly of power. The most corrupt departments were police, power and taxation. 245. While this study did not systematically investigate the level of corruption in the ANR sector, many examples where mentioned during the evaluation that indicate that systemic corruption still exists in the public and private sectors and is a fact of life for most citizens. Some anecdotal examples of corruption are: (i) (ii) Civil servants paying for promotion and expecting to recoup costs from financial kick-backs and commission payments. Contractors providing prefinance for village subprojects funded by local development funds which require a 25% deposit to be raised by the community to allow them to qualify for the works, with the money later recovered from the contract. Political favoritism in the allocation and location of flood protection works and political involvement in the selection of village development schemes in rural development projects Irrigation officials extracting extra payment for supplying water to farmers Importers and suppliers of agrochemicals paying the testing laboratory to provide a more favourable analysis of their chemicals. A project manager procuring 5-year supply of office materials during his 6 months tenure in the position to maximize kick-backs. Agricultural researchers asked to pay back a percentage of research project funds as a condition for the release of the funds by financial controllers.

(iii) (iv) (v) (vi) (vii)

246. The extent of corruption in Pakistan has affected the performance of projects in the ANR sector, and has implications for the need to consider the potential for corrupt practices and ways for limiting the realization of this potential. The example of the flood sector loan which funded a multitude of small projects implemented by contractors is given as a project that has more opportunity for corruption. ADB has recognised the impact of corruption and has tried to ensure that its anti-corruption policy is applied with close supervision and monitoring of projects, as much as possible but ultimately, the solution lies in changing the incentive (and disincentive) structure within society as a whole. In recent years the Government has undertaken several initiatives including civil service reform designed to depoliticize recruitment and promotions and the Government asserts that corruption at senior levels has been significantly reduced. Surveys on Pakistan by the World Bank Institute also show a marked improvement on control of corruption. However, the country still lags behind most other South Asian countries and other

60

Transparency International. 2002. Nature and Extent of Corruption in the Public Sector. Pakistan.

80 governance indicators such as regulatory quality and rule of law have shown little or no improvement between 1996 and 2002.61 C. Gender

247. ADBs program of support to the ANR sector over the last 20 years has involved support for gender although during the earlier part of the period gender issues were not accorded as much attention as now. And also the nature of the investment for some projects in the ANR sector, especially those concerned with engineering physical works for irrigation and drainage gender issues were not relevant and were not accommodated for in the design. However, the design of the RDPs supporting rural development did address gender issues through the formation of womens organisations and included activities that were targeted specifically for women. Project evaluation documents and monitoring reports unfortunately do not specify the impact of this positive support, but considering the traditional role of women in rural society in the challenging gender framework in Pakistan, direct support for women can be expected to be very positive. The livestock development project include the appointment of female livestock production officers who were more effective in working with womenPakistans traditional livestock managersthus avoiding cultural barriers that occur when men are employed in this role. The IPM program that was supported by ADB TA also supported targeted assistance to women through training female participants in farm field schools. The evaluation of this project noted that: From an initially very limited understanding of the pesticide issues, women developed a heightened awareness of health and environmental risk factors associated with pesticide use and storage. The PCR for the 0n-farm Water Management Project (19811987) noted that project implementation had no special focus on women, either as beneficiaries or participants, despite the importance of women in agriculture, although it should be acknowledged that the time of this project gender issues were not given much attention in development planning. Dealing with gender issues in project design and implementation can in some instances be a distraction from the more significant issues of project sustainability and economic performance. Many of the issues concerning gender in Pakistan are deeply entrenched, especially in conservative Muslim society. The question can be asked whether ANR development projects are the correct model to deal with many of the issues and whether project resources specifically directed for gender issues as a subset of the main project objective are able to address and rectify gender issue in a lasting and sustainable manner. While the formation of womens groups for specific purposes is an effective tool for empowering women, there are often issues of sustainability of womens groups. Long term and fundamental change in attitudes must be supported through enduring education and institution reform at the local government level. D. Effectiveness of Project Preparatory Technical Assistance

248. The current model for project preparatory TAs which relies on outside consultants for project preparation can result in ADB and the Government disengaged. Relying on consultants for the ideas, innovation and justification for projects, while maybe cost effective, does not lead to significant input by either ADB or the Government until after the project has been prepared.. Frequently the project design has to be modified, or in some cases rejected, at fact-finding and appraisal at the completion of the PPTA, with a consequent waste of TA resources. Moreover, the project preparatory TA process is output driven with the main objective to prepare a project that is acceptable to ADB and the Government, with success measured by the size and timely
61

D. Kaufmann, A Kraay and M. Mastruzzi, 2003: Governance Matters III: Governance Indicators for 1996-2002 <http://info.worldbank.org/etools/docs/library/17572/govmatters3.pdf>

81 approval of the ensuing loan. The process becomes dominated by this objective. Much of project preparation and loan processing is dominated by addressing crosscutting and safeguard issues with insufficient attention being given to meaningful stakeholder engagement in problem definition, consideration of alternatives and a sound appraisal of economic and financial feasibility. 249. The consultants involved may also be removed from ADB policy, guidelines and experience, and not able to fully appreciate the value and outcomes of the ADBs own research and collective experience. Consultants may not be familiar with latest ADB evaluation findings. In some cases institutional memory is held by the consultants, as ADB staff are reassigned and promoted to other regions and duties. 250. Some ways to improve this unsatisfactory situation include (i) (ii) (iii) Increase the number of technical specialists in the PRM and have resident mission staff more closely involved in the project identification and preparation process Inclusion of ADB and Government staff in the preparation team, maybe as the team leader or the economist. Transfer more ADB headquarters operational staff to PRM (while recognizing that they may in some cases continue to play a role in other regional countriesa quid pro quo that could operate with other resident missions in the region) to reinforce the country presence and develop closer links to the government departments. ADB to offer short refresher courses or training modules for consultants, possibly conducted through distance learning, with credits for coming up to speed with ADB policies, guidelines, research and evaluation findings. Fee scales could be linked to levels of accreditation and having successfully completed short-courses. The PRM to do more sector analysis on an ongoing basis to underpin the country program. ADB to develop a website for discussion and debate on developmental issues for consultants and interested parties and to ensure the consultants are supplied with or directed to relevant ADB documents. Sponsor international and in-country for fee workshops on development issues and topics for the consulting fraternity. Promulgate best-practice guidelines for feasibility studies Require consultants to pay an annual registration fee for entitlement to ADB material and to belong to subscription mailing lists.

(iv)

(v) (vi) (vii) (viii) (ix)

E.

Recommendations

251. This section presents a summary of the main recommendations for ADB and the Government. Recommendation Responsibility For ADB (and Government Consideration) 1. ADB should focus its assistance program on fewer areas of South Asia Regional interest or subsectors: water resources management, policy and Department (SARD) regulatory functions, infrastructure rehabilitation and institutional reform, and support for private sector initiatives. The drift away from investment in production related activities should be reversed

82 Recommendation and the new CSP should recognize the place that the productive agricultural and water resources sector play in Pakistans economic future. A longer term directed and sustained commitment should be made and continuing dialogue and support through TA and loans maintained with the sector, recognizing that the investment climate may not be conducive for major investment during all of the time over the medium term planning period. Sector investment should be based on a long-term sector roadmap and practical sequence of reforms, capacity strengthening and investment programs in partnership with Government and other external funding agencies, and provide assistance following the roadmap in a sequential manner with donor coordination. The ADB should, in conjunction with government develop an effective strategy and assistance plan for subsector in a participatory and consultative manner, and ensure that lessons identified in previous projects are incorporated and addressed in new projects and programs. 2. Responsibility

Projects should be modeled on provincially based sector projects SARD and the rather than federally administered umbrella type projects which are Government controlled from the central level as this model contributes to delays in the release of funds and for which the provinces do not have direct commitment and ownership. Recognition should be made that in the future projects will have to accommodate the devolution to the three local government tiers, namely, district, tehsil (subdistrict unit of administration), and Union Council structures with funding provided direct to the district level. The CSP should maintain a reasonable degree of flexibility to allow SARD and the for changes due to unpredictable events in an uncertain future, and Government the uncertain level of ADF funding that may be available through the use of new facilities, such as the multi-tranche financing facility, public-private sector partnership, and serial funding over a longer time period. Policy reform should be dealt with separately from project funding SARD and the and be part of longer-term sector, and subsector plans (as Government mentioned in item 1 above). As international evidence has shown the ineffectiveness of conditionality, project conditionalities should only be imposed when the importance of policy change and reform is absolutely necessary for the project to achieve its planned outcome and where the government has a commitment to implement reforms. Where reform and adjustment is part of a long term program then Government should be compelled to address the issue before a project is advanced and approved as part of the long term dialogue between government and the ADB. Where there is a major dichotomy in policy or attitude between government and ADB conditionality should not be imposed if failure to meet the condition will seriously jeopardize the project. Loan conditionalities and covenants should be identified early in the

3.

4.

83 Recommendation project formulation and preparation process and recognized as part of the procedure that are raised earlier in project preparation, rather than as an imposition inserted during loan negotiations. The full impact and worst case scenario of the possibility of failure to meet conditionality should be analyzed before they are enshrined in the loan agreement. 5. Responsibility

Project complexity in relation to executing and implementing SARD and the agency capability, particularly at the local government level, needs Government to be rigorously taken into account with greater use of the cluster loan or new multi-tranche financing facility such that projects can be broken down into more manageable pieces. Government frequently lacks ownership of ADB projects. The PPTA SARD and the facility, whereby the Government (and ADB) can largely disengage Government from project design and delegate this responsibility to consultants is becoming dysfunctional. More and more PPTA time is being taken up with crosscutting issues (often of little interest to the Government) with insufficient attention to basic sector and problem analysis, consideration of alternatives and consultation (particularly at lower levels of government and with the community). Given this situation, other ways of using PPTA funds needs to be found, such that Government drives the project preparation process. ADB needs to find a better balance between the number of SARD projects and subsectors of engagement and the number and skill areas of the human resources it has available for supervision and monitoring. Given the constraints on the budget ad staffing, this also implies operating across fewer subsectors (see 1. above). As a general rule ADB should not operate in a subsector unless it has a qualified national officer and/or international staff member I the Pakistan Resident Mission. Policy dialogue is an essential part of ADBs program. The need SARD for, and nature of policy dialogue needs to be better planned and documented. Staff with the right experience and skills must be available to engage the Government in policy dialogue on an ongoing basis. The primary responsibility for this should rest with staff in the Pakistan Resident Mission. Effective policy dialogue can only be carried out on the basis of SARD and the good sector analysis and policy analytical capability. As a result of Government the significant red, ADBs capacity to engage in policy dialogue has been degraded. ADB needs to ensure it has access to good quality and up-to-date analytical work at all times for those subsectors where it is actively engaged.

6.

7.

8.

9.

10. ADB should ensure that government meets its full responsibility for SARD and the monitoring project outputs and outcomes as part of standardized Government

84 Recommendation M&E functions. (The inspection report for the Chashma Right Bank project concluded that ADB has an obligation to ensure that M&E is carried out in compliance with its operational procedures). The feasibility of supporting a centralized service provider at provincial level as an alternative to project specific facilities should be carried out as a matter of urgency to strengthen the M&E process. Responsibility

11. ADB should provide more assistance for project start-up through a SARD project preparation facility and TA to assist IAs prepare for the project (staff, preconditions, PIU and procurement of necessary equipment) to reduce the startup time for project implementation. Ideally this assistance should be provided before the imposition of commitment charges on the outstanding loan to reduce unnecessary costs. 12. Cofinancing with other funding agencies can be recommended SARD and the where there are synergies and gains from the cofinancing (where Government another financing agency funds associated TA for example) but the ADB should avoid cofinancing where there are conditionalities to the loan outside of the control of the ADB, and that may jeopardize the position of the ADB if the cofinancier withdraws. (For example, the experience with the NDP, where the World Bank, which was responsible for the institutional reforms, withdrew leaving a funding gap). For Government Consideration 1. Review of Rural Development. A comprehensive evaluation and The Government review of the rural development projects should be done by the and ADB Government in conjunction with ADB, or other funding agencies, to establish lessons identified and best practices to consolidate the body of knowledge gained from rural development projects. The development of alternative models compatible with devolution of responsibility to local level government, responsive to local needs and effective in achieving outcomes should be done and the feasibility of direct support to district administrations through a contestable rural development fund coupled with capacity building should be evaluated. 2. Monitoring and Evaluation. Government rarely carries out The Government project monitoring and evaluation as envisaged in project loan and ADB agreements. In many cases there is not sufficient data to allow a proper ex-post evaluation of project outputs and outcomes to be (re)estimated. Given this situation it is recommended that the Government and ADB review this activity to identify ways to effective meet ADB's needs and provide useful (and used) information to the Government as part of project management. This is likely to involve moving from project-based M&E to expanding and strengthening the monitoring and evaluation unit that is in the Planning Commission at the federal level, and in the

85 Recommendation line agencies in the provinces, and associate this agency to supervise to manage and or support the M&E activities in all projects. The objective is to provide a proficient, timely and impartial results-based monitoring and evaluation for all ADB projects. 3. Responsibility

Allocation of Operation and Maintenance (O&M) Funds. A lack Government of funds for the O&M of infrastructure funded under ADB loans is a long standing problem contributing to a lack of sustainability and reduced benefits. Higher recognition should be given to the future O&M requirements and implications of projects and provision made for sufficient funding to ensure sustainability for the facilities and infrastructure created. Commitment to budgeting and allocating resources to O&M should be a major consideration in project design and could be made a precondition for approval and release of funds. Alternative methods for funding O&M should be evaluated and embodied in the project design. These could involve the use of alternative funding mechanism such as the use of part of the project funds to establish a trust fund for future O&M, the greater contribution from the beneficiaries through equity capital and used charges, the imposition of pay for service charges (tolls), local tax and Public Private partnerships where the infrastructure is managed by a separate entity. Integration Between Line Agencies. The Government should Government ensure better integration between the different line agencies at provincial level involved with implementing development projects to ensure the there is sufficient cooperation and synergy, for example between irrigation and agriculture to realize the potential outcome. Dedicated Project Staff. Delays in project startup and the Government and appointment of key project staff contribute to poor performance. ADB Alternative project implementation methods need to explored and evaluated to strengthen project implementation. Alternatives could include the use of special TA, or a continuation of the PPTA to carry over into project startup, the appointment of dedicated project support staff, and contracted out project management services with payment based on implementation progress and performance as an incentive to achieve timely results.

4.

5.

86

Appendix 1

FRAMEWORK FOR STRATEGY QUALITY ASSESSMENT

Progress Indicators
R E S U L T S Yes = Partlly = No = 2 1 0

(identified?)

Yes = Partlly = No =

2 1 0

Yes = Partlly = No =

2 1 0

Baseline
(described & quantified along key dimensions?)

Targets Strategic Gap

(explicity identified?)
Yes = Partlly = No = 4 2 0

(timebound targets over baseline established?)

P A R A M E T E R S

ADB's Broader Strategic Agenda

(sets parameters?)

Yes = Partlly = No =

10 5 0

Country Policies
(assessed, relevance established & aligned?)

Yes = Partlly = No =

10 5 0

Coordination with other partners

(complementarity?)

P R O C E S S

Analytical Basis
(studies; context, institutional & stakeholder analysis; lessons)

Ex. = Ad. = Absent =

10 5 0

Option Identification
(options considered & reasons for choices explicit?)

Ex. = Ad. = Absent =

10 5 0

Stakeholder Involvement
(extent of influence/ ownership)

C O N T E N T / C O V E R A G E

Ex. = Ad. = Absent =

10 5 0

Consistency & Coherence

(internally & across all operations)

Continuity
(building on previous initiatives)

Ex. = Ad. = Absent =

10 5 0

Ex. = Ad. = Absent =

10 5 0

Critical Mass/ Focus

(sector/subsector, group, geographic)

Partnerships The Strategy

(other donors, NGOs, private sector, civil society)

Ex. = Ad. = Absent =

10 5 0

Ex. = Ad. = Absent =

10 5 0

Assumptions & Risks

(explicit & mitigation strategy?)
Ex. = Ad. = Absent = 10 5 0

Positioning
(ADB comparative advantage identified & justified)

Ex. = Ad. = Absent =

10 5 0

O T H E R F A C T 0 R S

High Mod. Not

= = =

10 5 0

Performance Monitoring & Evaluation

(provided for?)

High Mod. Not

= = =

10 5 0

Flexibility
(role for emergent strategy?)

Innovativeness

Overall Assessment of Formal Strategy

Ex=excellent, Ad=adequate, Mod=moderate.

Appendix 1

87

A.

Progress Indicators Identified, Baseline Described and Quantified, Time-Bound Targets Over Baseline Established?

1. These three indicators assess the extent to which the expected results from the strategy were specified in measurable terms over a quantified baseline situation. 2. 3. B. The maximum score means comprehensively present overall and for sectors (2). Rating: any score between 2 and 0. Strategic Gap Identified?

4. Related to the above, this indicator assesses whether the gap between target and baseline is clearly stated. 5. The maximum score means that the size of the task to be addressed by the strategy is clear overall and for each sector (4). C. ADBs Broader Strategic Agenda

6. This indicator assesses the extent to which ADBs broader strategic agenda (overarching, crosscutting and sector policies and strategies) influenced choices made in the country strategy. De facto, it may be an assessment of the ability of those policies to exert an influence. 7. The maximum score means that ADBs general, sector and thematic strategies and policies were explicitly taken into account and were influential in setting the boundaries or parameters for what is in or out of the strategy at the country level (10). 8. D. Rating: any score between 10 and 0. Country Policies

9. This indicator assesses the extent to which stated country strategies, plans and policies were assessed and taken into account in the strategy. It goes beyond a simply assessment of alignment. Alignment with a flawed strategy or alignment to a policy to which the government is not really committed is not positive. 10. The maximum score means that country policies were carefully assessed, their relevance determined and, where relevant, ADBs strategy was aligned with these (10). 11. E. Rating: any score between 10 and 0. Coordination with Other Partners

12. This indicator assesses the extent to which the programs of over development partners were taken into account and influenced the choices made by ADB, i.e., aid coordination. Real coordination should go beyond mere avoidance of duplication to exploit opportunities for synergy, including pooling of funds were appropriate. 13. The maximum score means that an assessment of the programs and strategies of other

88

Appendix 1

development partners was made, that demonstrable efforts to achieve synergy were made and that dialogue was held with partners. Opportunities for two-way partnership should be evident (10). 14. F. Rating: any score between 10 and 0. Analytical Basis (10)

15. This indicator assesses the extent to which the strategy was based on evidence from sound analysis. (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) 16. G. The number, coverage and rigor of economic, sector or other studieswhere commissioned/carried out by ADB or othersupon which the strategic analysis is based. The economic context and the consequences of this are clearly spelled out. The policy context and the consequences of this are clearly spelled out. The political economy context and the consequences of this are clearly spelled out. Institutional analysis has been carried out and the consequences of this incorporated. Stakeholder analysis has been carried out and the consequences of this incorporated. The lessons from previous strategies have been identified and incorporated in the new strategy. Economic modeling has been carried out to compare alternative approaches, particularly with respect to exploring policy options.

Rating: any score between 10 and 0. Option Identification

17. This indicator assesses whether ADB has explicitly considered more than one option before settling on its strategic approach. Did ADB approach strategy preparation with an open mind or was the strategy written to justify decisions already made? Evidence of option consideration indicates that a closed mind approach may not have prevailed. 18. The maximum score means several alternative strategic approaches were explicitly considered and the reasons for the preferred approach clearly given (10). 19. H. Rating: any score between 10 and 0. Stakeholder Involvement

20. This indicator assesses the extent to which stakeholders had influence and have demonstrated ownership of the strategic choices made. 21. The maximum score means that all key stakeholders participated in the strategy development and that their input demonstrably affected the choices made (10). 22. Rating: any score between 10 and 0.

Appendix 1

89

I.

Consistency and Coherence

23. This indicator assesses the extent to which the strategy avoids internal contradictions in its strategic choices and the extent to which the various elements of the strategy link together as a coherent overall program. 24. The maximum score means that there are no internal contradictions in the strategy and that there is a coherence and synergy demonstrably evident in the total of ADB operations (public and private sector operations, TAs, ESW and policy dialogue) (10). 25. J. Rating: any score between 10 and 0. Critical Mass/Focus

26. This indicator assesses the extent to which ADBs strategy and proposed package of resources to any one area is likely to be sufficient to produce sustained results. A key limiting factor is likely to be ADBs human resources. Are these stretched too thin to provide a critical mass of ideas and support? 27. The maximum score means a clear and limited focus by sector and/or subsector, target group and/or geographic area, consistent with the size of the overall resource envelope, such that substantial and sustainable results are likely to be achieved (10). 28. K. Rating: any score between 10 and 0. Assumptions and Risks

29. This indicator assesses the extent to which the strategy explicitly identifies the risks that could prevent strategy realization and the assumptions upon which success is predicated. Mitigation measures for risks should be identified. Particularly important are political economy risks. 30. The maximum score means that assumptions and risks associated with the strategy are explicitly identified and that mitigation measures for risks are identified (10). 31. L. Rating: any score between 10 and 0. Continuity

32. This indicator assesses the extent to which ADBs strategy provides critical mass over time. Is the strategy building on past experience with clearly identified learning? 33. The maximum score means that that there is clear evidence of a medium to long-term commitment to an area of focus such that results can expect to build over time based on accumulated knowledge and experience. 34. Rating: any score between 10 and 0.

90 M.

Appendix 1

Partnerships

35. This indicator assesses the extent to which the strategy incorporates genuine partnerships (not always with ADB as the lead partner) such that results are likely to be greater than those that would be achieved by ADB working alone. 36. The maximum score means that synergistic partnership opportunities are identified with other funding agencies, NGOs, private sector and civil society (10). 37. N. Rating: any score between 10 and 0. Positioning

38. This indicator aims to assess the extent to which the strategy identifies and justifies a position of comparative advantage for ADB. 39. The maximum score means that ADBs comparative advantage(s) are clearly identified and justified and the strategy is demonstrably consistent with those comparative advantages (10). 40. O. Rating: any score between 10 and 0. Performance Monitoring and Evaluation

41. This indicator assesses the extent to which the strategy incorporates the means for monitoring and evaluating the attainment of strategy and the results of strategy. 42. The maximum score means that the process of monitoring and evaluation is fully provided for in terms who will do this, how and when. Costs provided for (10). 43. P. 44. Rating: any score between 10 and 0. Innovativeness This indicator assesses the degree to which the strategy demonstrates innovation.

45. The maximum score means a high degree of innovativeness based on learning and with a well justified rationale (10). 46. Q. Rating: any score between 10 and 0. Flexibility

47. This indicator assesses the degree to which the need for, and means of, flexibility is incorporated. 48. The maximum score means the role and justification for emergent strategy is explicitly covered and the process for decision-making is clearly spelt out (10). 49. Rating: any score between 10 and 0.

Appendix 2

91

AGRICULTURE AND NATURAL RESOURCES SECTOR STRATEGIES IN ADB COUNTRY STRATEGIES A. Strategies for Economic Growth and Development (1985 to 1989)1

1. This was ADBs first Pakistan country strategy. It was a major exercise that resulted in a massive 804 page document. The principal end sought by the strategy was balanced growth. The general means to achieve this end were identified as policies to promote structural change, improved economic efficiency, and stronger development institutions. Agriculture replaced the energy sector as the major beneficiary of Bank resources. A major thrust of the development program was to move from self-sufficiency to commercial exports Key elements of strategy for this sector were: (i) (ii) (iii) The modernization and maintenance of irrigation structures that were likely to boost productivity. Support for research and extension in industrial crops, fisheries, livestock development and forestry, and credit for agro-industries. Priorities remained heavily weighted in favor of irrigation and drainage, receiving nearly 70% of the allocation.

2. A reduction of subsidies and additional resources oriented to research and extension, grain storage, livestock forestry and fisheries, and to diversification of the production base. B. The Banks Operational Strategy in Pakistan (1990 to 1994)2

3. The principal end sought by ADBs second operational strategy was self-sustaining growth. The general means of achieving this end were identified as: (i) promotion of export growth; (ii) domestic resource mobilization; (iii) increased private sector participation; (iv) improved efficiency of existing investment while optimizing resource mobilization; and (v) poverty alleviation and human resource development. 4. It was considered that a shift to agriculture had contributed to increasing productivity and the improvement and expansion of irrigation and drainage facilities had been the focus of Bank operations. In this plan the ADBs efforts to increase productivity were geared towards: (i) Finding appropriate agronomic practices to realize full yield potential and improving the quality and availability of agricultural inputs, (ii) Dissemination to, increasing farmers awareness of appropriate crop technology packages, (iii) Promotion of adequate marketing, storage and processing facilities, and (iv) Efforts to improve agricultural research and extension services C. Country Operational Strategy Study for Pakistan (1995 to 1998)3

5. In 1993, the Government launched SAP to address the poor social performance in Pakistan. In this context, ADB prepared its third country operational strategy. Previously, economic growth had been the principal (and only) end sought. With this strategy, human
1 2 3

ADB. 1985. Strategies for Economic Growth and Development: The Banks Role in Pakistan. Manila. ADB. 1990. The Banks Operational Strategy in Pakistan. Manila. ADB. 1995. Country Operational Strategy Study for Pakistan. Manila.

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resource development became the main end, with economic growth an important, but secondary, objective. The role of economic growth was to generate employment and financial resources for investment in human and physical capital. 6. General means to be followed by ADB in support of the economic growth objective were: (i) (ii) (iii) Harnessing the growth potential of the private sector. Continued support to agriculture, transport, energy, industry and finance. Environmental conservation.

7. In was considered that the agriculture sector should remain a major area of ADBs intervention in support of growth and should be closely linked with poverty reduction and environmental protection. The ADBs priorities in the sector were: (i) (ii) (iii) (iv) (v) The rehabilitation, maintenance, and modernization of the existing irrigation infrastructure, and control of salinity and waterlogging. Ensuring adequate provisions in projects for training. Integrated rural development projects targeted to particularly poor and isolated areas. Support to address the issue on rural financial markets. Provision of TA for the formulation of a Rural Financial Market Development Strategy

D.

Country Operational Framework (1999 to 2001)4

8. In 1998, economic sanctions were imposed by the Group of 7 countries following Pakistans nuclear tests. The sanctions magnified Pakistans socioeconomic difficulties. The incidence of poverty worsened as the economy plunged from the loss of investor confidence, slowdown in private sector investment, and the suspension of new official development assistance. The economic crisis led to ADBs reassessment of its strategy and to the formulation of the country operational framework for the period 19992000. Under this, the principal ends sought increased from two to three and economic growth was again elevated to first position: (i) improved economic efficiency and export performance; (ii) enhanced human and social development; and (iii) strengthened governance. Governance was identified as a critical issue since most economic and social problems were seen as having a governance dimension. ADB committed to the following general means: (i) (ii) (iii) (iv) (v) (vi) Promotion of finance, trade, and industry reforms. Development of an efficient and competitive power sector. Increased efficiency in the agriculture sector. Development of the provincial road networks, including rural roads. Improved quality, efficiency, and access in the SAP sectors. Institutional reforms, improved aid and debt management, legal and judiciary reform, and strengthening of institutions in sectors where ADB is engaged specifically, reforms of the institutions involved in export promotion, taxation, and the provision of electricity.

Asian Development Bank. 1999. Pakistan: Country Operational Framework 19992000. Manila.

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9.

Efficiency in agriculture sector was to be increased through: (i) (ii) (iii) (iv) Removal of policy distortions and reforming water resources management, Support to rural credit for poverty reduction through microfinance development Improvement of productivity under integrated pest management. Rural jobs will be created through assistance for a rural development project in Malakand, a farmer-managed irrigation in the Punjab, several other area development loans, and rural microfinance.

E.

Country Strategy and Program (2002 to 2006)5

10. The most recent country strategy increases the list of ends sought to four, headed by good governance. The other three are (i) poverty reduction, (ii) sustainable pro-poor economic growth, and (iii) inclusive social development. General means identified to achieve these ends were: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) 11. Mainstreaming good governance across all ADB operations. Specific governance interventions. Structural reforms in key sectors. Rural development. Employment generation. Regional cooperation. Increased women's participation in the workforce, government, and judiciary. Mainstreaming environmental concerns.

ADB support for higher growth in rural areas was to be achieved by focusing on: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) The right policy and institutional framework, Increasing agriculture productivity and diversification, strengthening research and extension services Expanding the role of the private sector in storage and agricultural support services, Increasing non-farm income by developing agri-business and rural small and medium enterprises, Promoting rural-urban linkages such as rural roads, Expanding rural economic infrastructure especially for irrigation, drainage, and water resource conservation and management, Promoting financial intermediation, mobilizing savings and enhancing access to credit in rural areas, and Investing in infrastructure where poverty incidence is high.

12. A country strategy program update was prepared in 2003 to cover the period 2004 to 2006.6 This put poverty reduction as the primary end sought with good governance, pro-poor economic growth and inclusive social development as the general means to this end. 13. A further update was prepared in 2004 covering the period 2005 to 2006. This has seen some significant changes to ADBs strategic agenda necessitated by the Governments decision to use OCR resources only for infrastructure projects and provincial debt restructuring. The
5 6

ADB. 2002. Country Strategy and Program: Pakistan 20022006. Manila. ADB. 2003. Pakistan: Country Strategy and Program Update (20042006). Manila

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primary end sought by the strategy remained poverty reduction. The number of general means to this end increased to six (i) (ii) (iii) (iv) (v) (vi) greater emphasis on higher and sustained pro-poor growth, good governance, social development, gender and development, private sector development, and regional cooperation.

14. Future assistance for agriculture specifically mentioned included support for rural development, agri-business development and forestry sector development.

LIST OF LOANS AND TECHNICAL ASSISTANCE, 19852005 List of Loans Closed and Ongoing
Agriculture and Natural Resources Project Name GUJRANWALA AGRICULTURAL DEVELOPMENT PROJECT SMALL DAMS PROJECTS PAT FEEDER CANAL REHABILITATION & IMPROVEMENT PROJECT COTTON DEVELOPMENT PROJECT BALUCHISTAN GROUNDWATER & TRICKLE IRRIGATION PROJECT SECOND AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN SECOND AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN AGRICULTURAL INPUTS PROGRAM AGRICULTURAL INPUTS PROGRAM FLOOD PROTECTION SECTOR PROJECT CHITRAL AREA DEVELOPMENT PROJECT FRUIT AND VEGETABLEMARKETING PROJECT SECOND ON-FARM WATER MANAGEMENT PROJECT CHASMA RIGHT BANK IRRIGATION PROJECT (STAGE II) KHUSHAB SALINITY CONTROL & RECLAMATION PROJECT SECOND AQUACULTURE DEVELOPMENT PROJECT FLOOD DAMAGE RESTORATION PROJECT LIVESTOCK DEVELOPMENT PROJECT SWABI SALINITY CONTROL & RECLAMATION PROJECT SECOND BARANI AREA DEVELOPMENT AGRICULTURAL CREDIT PROJECT AGRICULTURE PROGRAM KOTRI BARRAGE REHABILITATION PROJECT Chashma Right Bank Irrigation Project (Stage III) NWFP BARANI AREA DEVELOPMENT PROJECT FLOOD DAMAGE RESTORATION (SECTOR) PROJECT Pehur High-Level Canal Project THIRD PUNJAB ON-FARM WATER MANAGEMENT PROJECT MARALA-RAVI LINK CANAL SYSTEM Forestry Sector National Drainage Sector Bahawalpur Rural Development Dera Ghazi Khan Rural Development Second Flood Protection Sector Malakand Rural Development NWFP Barani Area Development Project-Phase I Agriculture Sector Program II Agriculture Sector Program II Agriculture Sector Program II - TA Sindh Rural Development Sustainable Livelihoods in Barani Areas Agribusiness Development New ADB Sector Classification New ADB Sector Classification(2) Net Loan Amount ($ million) 30.544 31.032 162.151 42.221 6.225 40.116 40.056 80.342 71.944 123.644 17.679 19.761 27.570 48.163 52.119 11.206 39.397 23.860 95.615 22.830 73.360 198.371 16.710 213.724 31.404 77.641 124.687 46.351 2.803 11.424 175.923 33.414 37.588 63.624 44.860 58.478 134.980 241.902 2.290 55.199 39.630 29.373 Date Closed 21-Nov-94 14-Mar-96 3-Apr-00 28-Jan-99 27-Aug-96 17-Jul-95 17-Jul-95 31-Dec-89 31-Dec-89 15-Apr-99 29-Oct-97 1-Feb-96 6-Jul-95 9-Mar-95 5-Mar-99 29-Jul-96 8-Oct-93 6-Jan-99 31-Jan-00 24-Dec-98 30-Jun-94 30-Jun-94 27-Nov-00 213.724 1-Feb-01 8-Feb-99 124.687 26-Aug-02 30-Jul-98 11.424 175.923 33.414 37.588 63.624 44.860 58.478 134.980 241.902 2.290 55.199 39.630 29.373 Implementation Period (Years) 9.759 10.375 14.304 12.337 9.775 8.622 8.622 3.038 3.038 11.647 10.181 8.266 7.581 7.249 10.455 7.740 4.529 9.279 10.271 8.847 3.649 3.553 9.178 8.362 6.153 8.474 3.496 7.383

Sector/Loan No. 0734 0750 0772 0791 0800 0810 0811 0825 0826 0837 0838 0851 0871 0874 0901 0916 0957 0973 0976 1012 1044 1062 1101 1146 1179 1209 1294 1297 1350 1403 1413 1467 1531 1578 1672 1787 1877 1878 1879 1934 2134 2171 SF SF SF SF SF SF SF SF SF SF SF SF SF SF SF SF SF SF SF SF SF

Approval 19-Feb-85 31-Oct-85 17-Dec-85 30-Sep-86 20-Nov-86 4-Dec-86 4-Dec-86 18-Dec-86 18-Dec-86 25-Aug-87 27-Aug-87 29-Oct-87 8-Dec-87 10-Dec-87 22-Sep-88 3-Nov-88 30-Mar-89 28-Sep-89 26-Oct-89 20-Feb-90 6-Nov-90 11-Dec-90 26-Sep-91 17-Dec-91 24-Sep-92 15-Dec-92 22-Dec-93 8-Mar-94 31-Jan-95 9-Nov-95 12-Dec-95 26-Sep-96 4-Sep-97 13-Nov-97 18-Mar-99 28-Nov-00 13-Dec-01 13-Dec-01 13-Dec-01 20-Nov-02 14-Dec-04 19-May-05

3008 Agriculture sector development 3008 Agriculture sector development 3005 Irrigation
3001 Agriculture production

3005 Irrigation 3001 3001 3001 3007 3900 3001 3005 3005 3005 3003 3900 3006 3005 3900 3001 3001 3005 3005 3008 3900 3005 3005 3007 3004 3005 3001 3900 3007 3900 3900 3001 3001 3001 3900 3008 3001
3001 Agriculture production Agriculture production Agriculture production Agriculture production

Water resource Multisector

Agriculture production

Irrigation Irrigation Irrigation Fishery Multisector Livestock Irrigation Multisector

Agriculture production Agriculture production

- SF - SF - SF - SF

Irrigation Irrigation Agriculture sector development Multisector Irrigation Irrigation Water resource Forestry Irrigation
Agriculture production

Multisector Water resource Multisector Multisector

Agriculture production Agriculture production Agriculture production

Appendix 3

Multisector Agriculture sector development

Agriculture production

95

96

List of TAs Closed and Ongoing

Amount Financed ($ million) 0.225 1.300 0.290 0.000 0.300 0.000 0.053 0.285 0.188 0.239 0.240 1.315 0.150 0.350 0.215 0.350 2.225 0.355 0.150 0.075 0.350 0.846 0.400 0.350 0.500 1.153 0.750 0.575 0.600 0.460 0.600 0.071 0.371 0.300 0.557 0.560 ImpleMileston Dates mentation Financial Period Closing Cancellation (Years) 01-Dec-87 01-Mar-91 01-Dec-88 01-Dec-88 01-Dec-88 01-Dec-88 01-Dec-88 01-Dec-88 01-Dec-88 01-Dec-88 01-Mar-90 01-Aug-97 01-Apr-91 01-Mar-92 01-Apr-98 01-Feb-91 01-Apr-98 01-Aug-89 01-Aug-89 01-Apr-98 01-Dec-95 01-Dec-95 01-Dec-95 01-Feb-91 01-Jan-97 01-Jan-97 01-Jan-97 01-Sep-91 01-Aug-94 01-Dec-91 01-Apr-98 01-Dec-93 01-Apr-00 31-Aug-94 31-Aug-98 15-Jun-92 2.279 5.378 2.841 2.841 2.786 2.786 2.493 2.151 2.137 2.129 3.241 10.666 4.277 4.732 10.605 3.263 10.430 1.742 1.742 10.351 6.926 6.926 6.926 1.773 7.534 7.534 7.534 2.153 4.614 1.468 7.405 2.975 9.192

Appendix 3

Sector/TA No. Project Name Agriculture and Natural Resources 1 699 BALUCHISTAN TRICKLE IRRIGATION 2 708 MASTER PLAN FOR BARANI AREA DEVELOPMENT 3 743 FISHERIES SECTOR STUDY 4 743 FISHERIES SECTOR STUDY 5 748 FLOOD CONTROL SECTOR 6 748 FLOOD CONTROL SECTOR 7 772 AGRICULTURAL INPUTS PROGRAM 8 803 CHASHMA RIGHT BANK IRRIGATION PROJECT (STAGE II) 9 804 LIVESTOCK SECTOR STUDY 10 805 SECOND ON-FARM WATER MANAGEMENT 11 826 SAVINGS MOBILIZATION BY ADBP 12 827 INSTITUTIONAL BUILDING OF ADBP 13 838 SIND FORESTRY DEVELOPMENT 14 882 STRENG CHICK-PEA RESEARCH IN COLLAB WITH ICRISAT 15 895 KHUSHAB SALINITY CONTROL AND RECLAMATION 16 914 FRUIT AND VEGETABLE EXPORT MARKETING STUDY 17 935 FRUIT & VEGETABLE MARKETING PROJECT 18 916 SWABI SALINITY CONTROL AND RECLAMATION 19 916 SWABI SALINITY CONTROL AND RECLAMATION 20 928 SMALL-SCALE TA FOR THE LIVESTOCK SECTOR 21 1099 RURAL DEVELOPMENT STRATEGY FOR SIND ARID ZONE 22 1099 RURAL DEVELOPMENT STRATEGY FOR SIND ARID ZONE 23 1099 RURAL DEVELOPMENT STRATEGY FOR SIND ARID ZONE 24 1149 SEED INDUSTRY DEVELOPMENT PROJECT 25 1170 FORESTRY SECTOR MASTER PLAN 26 1170 FORESTRY SECTOR MASTER PLAN 27 1170 FORESTRY SECTOR MASTER PLAN 28 1173 CHASMA RIGHT BANK-IRRIGATION 29 1266 STRENGTHENING OF ENVIRONMENTAL MANAGEMENT 30 1321 NWFP BARANI AREA DEVELOPMENT b DOMESTIC RESOURCE MOBILIZATION 31 1406 32 1407 LEGAL SERVICES b IMRPOVED TILLAGE TECHNOLOGY 33 1408 34 1438 STUDY ON POLICIES FOR FERTILIZER IMPORTATION/MARKETING b 35 1450 LAND RESOURCE EVALUATION AND PLANNING 36 1468 INSTITUTIONAL STRNG OF SINDH FOREST DEPT

Type PP AO AO AO PP PP PP PP AO PP AO AO PP AO PP AO AO PP PP PP AO AO AO PP AO AO AO PP AO PP AO AO AO AO PP AO

Sector Irrigation Agricultuire sector developmnet Fishery Fishery Water resource Water resource Agricultural Production Irrigation Livestock Irrigation Livestock Livestock Forestry Agricultural Production Irrigation Agricultural Production Agricultural Production Irrigation Irrigation Livestock Multisector Multisector Multisector Agricultural Production Forestry Forestry Forestry Irrigation Environment Multisector Agricultural Production Agricultural Production Agricultural Production Agricultural Production Environment Forestry 3005 3008 3003 3003 3007 3007 3001 3005 3006 3005 3006 3006 3004 3001 3005 3001 3001 3005 3005 3006 3900 3900 3900 3001 3004 3004 3004 3005 3002 3900 3001 3001 3001 3001 3002 3004

Approval 21-Aug-85 15-Oct-85 29-Jan-86 29-Jan-86 18-Feb-86 18-Feb-86 05-Jun-86 08-Oct-86 13-Oct-86 16-Oct-86 04-Dec-86 04-Dec-86 22-Dec-86 09-Jun-87 26-Aug-87 29-Oct-87 29-Oct-87 04-Nov-87 04-Nov-87 27-Nov-87 29-Dec-88 29-Dec-88 29-Dec-88 25-Apr-89 22-Jun-89 22-Jun-89 22-Jun-89 07-Jul-89 21-Dec-89 13-Jun-90 06-Nov-90 06-Nov-90 06-Nov-90 11-Dec-90 24-Dec-90 24-Jan-91

Sector/TA No. 37 1477 38 1481 39 1357 40 1582 41 1629 42 1709 43 1733 44 1768 45 1825 46 1927 47 1948 48 2125 49 2276 50 2327 51 2384 52 2452 53 2475 54 2563 55 2562 56 2585 57 2604 58 2918 59 2940 60 3131 61 3130 62 3132 63 3151 64 3229 65 3231 66 3383 67 3725 68 4058 69 4127 70 4167 71 4295 72 4319 73 4367 74 4435 75 4443 76 4525 77 4587

Project Name Type THIRD ON-FARM WATER MANAGEMENT PP STUDY OF CROP-BASED IRRIGATION OPERATIONS IN NWFP AO BARANI FARMING SYSTEM TRAINING AND RESEARCH AO RESTORATION AND IMPROVEMENT OF THE MARALA-RAVI LINK SYSTE PP STRENGTHENING ENV'L MGT FOR WATER RESOURCES DEVELOPMEN AO PEHUR HIGH-LEVEL CANAL PP CHOLISTAN DEVELOPMENT PP PUNJAB IRRIGATION WATER CONSERVATION (SECTOR) PP SSTA FOR THIRD PUNJAB ON FARM WATER MANAGEMENT PP NORTH WEST CANAL REMODELING PP FORESTRY SECTOR PP BALOCHISTAN GROUNDWATER RESOURCES REASSESSMENT AO IMPLEMENTATION OF THE NATIONAL CONSERVATION STRATEGY AO BHAWALPUR DIVISION AREA DEVELOPMENT PP FORESTRY DEVELOPMENT PROJECT IN THE NORTHERN AREAS OF P PP IRRIGATION MANAGEMENT PP SECOND SOCIAL ACTION PROGRAM PP LOAN RELATED: FORESTRY SECTOR AO SECOND FLOOD PROTECTION SECTOR PP DERA GHAZI KHAN RURAL DEVELOPMENT PP MALAKAND RURAL DEVELOPMENT PP BALOCHISTAN RURAL DEVELOPMENT PP NORTH WEST FRONTIER PROVINCE URBAN DEVELOPMENT PP STRENGTHENING FARMER'S CAPACITY IN SMALL DAMS OPERATIONS AO WATER RESOURCES STRATEGY STUDY AO SINDH RURAL DEVELOPMENT PP NORTH WEST FRONTIER PROVINCE BARANI AREA DEVELOPMENT PP AGRICULTURE SECTOR PROGRAM PP PUNJAB WATER SECTOR DEVELOPMENT PP INTEGRATED PEST MANAGEMENT AD ADDITIONAL PREPARATORY WORK ON THE SINDH RURAL DEVELOPM PP AGRIBUSINESS DEVELOPMENT PP RURAL LIVELIHOOD ENHANCEMENT THRU PARTICIPTRY RESETTLMN AD SUSTAINABLE LIVELIHOOD IN BARANI AREAS (PUNJAB) PP CAP BLDG FOR RURAL DEVT OF THE FEDERALLY ADMINISTERED TRI AD DETERMINNTS & DRIVERS OF POVRTY REDCTN & ADB'S CONTRIBTN AD BALOCHISTAN RURAL DEVELOPMENT AND DROUGHT MITIGATION PP WATER SECTOR IRRIGATION DEVELOPMENT AD MOBILIZATN OF GRASSROOTS STAKEHOLDRS FOR PRO-POOR SOCIA AD SINDH COASTAL AND INLAND COMMUNITY DEVELOPMENT PP AGRIBUSINESS DEVELOPMENT PROJECT IMPLEMENTATION SUPPOR AD

Amount Financed ($ million) 0.098 0.860 0.691 1.150 1.000 0.745 0.350 0.600 0.100 1.300 0.560 0.224 0.850 0.600 0.090 0.300 0.100 14.145 0.800 0.600 0.700 0.800 0.950 0.149 0.650 0.800 0.500 0.350 0.150 0.500 0.150 0.700 0.150 0.400 0.465 0.580 0.600 0.300 0.500 0.650 0.150

Sector Irrigation Irrigation Agricultural Production Water resource Irrigation Irrigation Multisector Irrigation Irrigation Irrigation Forestry Water resource Environment Multisector Forestry Irrigation Multisector Forestry Water resource Multisector Multisector Multisector Multisector Irrigation Multisector Multisector Multisector Agricultuire sector developmnet Water resource Agricultural Production Multisector Agricultural Production Irrigation Multisector Multisector Multisector Agricultuire sector developmnet Water resource Multisector Fishery Agricultural Production

3005 3005 3001 3007 3005 3005 3900 3005 3005 3005 3004 3007 3002 3900 3004 3005 3900 3004 3007 3900 3900 3900 3900 3005 3900 3900 3900 3008 3007 3001 3900 3001 3005 3900 3900 3900 3008 3007 3900 3003 3001

ImpleMileston Dates mentation Financial Period Approval Closing Cancellation (Years) 04-Feb-91 01-Oct-91 0.655 19-Feb-91 01-Sep-97 6.537 27-Jun-91 01-Aug-98 7.101 23-Oct-91 01-Jan-96 4.195 17-Dec-91 01-Apr-98 6.293 03-Jun-92 01-Jan-96 3.581 17-Jul-92 01-Apr-94 1.707 20-Oct-92 01-Apr-98 5.449 24-Dec-92 01-Apr-98 5.271 16-Aug-93 01-Apr-98 4.627 09-Sep-93 01-Apr-98 4.562 20-Jul-94 01-Dec-96 2.370 29-Dec-94 01-May-98 3.340 09-May-95 01-Mar-03 7.816 25-Aug-95 01-Apr-98 2.603 27-Nov-95 01-Apr-98 2.345 15-Dec-95 01-Jun-99 3.463 30-Apr-96 12-Aug-04 8.290 30-Apr-96 01-May-99 3.003 10-Jun-96 01-Apr-00 3.811 08-Jul-96 01-Apr-00 3.734 24-Nov-97 02-Jun-98 12-Dec-97 01-May-01 3.386 15-Dec-98 01-Apr-01 2.296 15-Dec-98 31-Aug-04 5.715 22-Dec-98 01-May-01 2.359 31-Dec-98 01-Jul-01 2.501 20-Jul-99 25-Jun-04 4.937 30-Jul-99 01-Jun-01 1.841 28-Dec-99 24-Sep-01 01-Jul-03 1.767 19-Dec-02 13-Jun-03 02-Sep-03 26-Jan-05 1.403 19-Dec-03 05-Mar-04 03-Aug-04 18-Nov-04 22-Nov-04 23-Dec-04 17-May-05

Appendix 3

97