The World Bank and the ADB have, on 26th April, jointly offered around $800 million to help undertake a five-year Mega City Renewal Programme (MCRP) to rehabilitate Karachi, Lahore, Rawalpindi and Peshawar.
These international financing institutions (IFIs) have, according to press news, agreed to help stop the running down of these important cities.
The ADB Country Director has been quoted saying that the infrastructure of these four cities was in a bad shape which needed to be urgently restored.
He said in this context both the donor agencies would soon be holding high level talks with the government officials to first finalise the Action Plan, which would aim at removing air pollution and rehabilitating roads and important buildings.
He added that they would also be finalising details with the federal and provincial authorities on how to help improve water supply, sewerage, sanitation and solid waste management of these four cities.
He observed that the federal and the provincial governments would have to show their commitment and ownership for the mega city rehabilitation programme.
One would wonder why Quetta has not been included in the list of mega cities picked up for rehabilitation.
As per press news, an ADB team visited Quetta from April 20 to 23. A tripartite inception meeting between the Government of Balochistan, ADB and the PPTA consultants' team, chaired by the Chief Secretary, Government of Balochistan, was held on April 21, 2004.
The main aim of the meeting was to reach overall understanding on programme objective pertaining to BRMP.
The Senior Economic Adviser, and leader of the ADB mission, said that a team of consultants would be travelling throughout Balochistan over the coming weeks to conduct technical studies and hold wide-ranging consultations on the design of the proposed program.
One major focus of the Program is to find ways to improve the provincial government's financial position and to support better arrangements for the planning and financing of delivery of key services like health, education and water supply at local government levels.
Means would also be established to improve financial management, at both province and local government levels, to ensure efficient allocation of resources and improved financial accountability and transparency.
This would lead to improved social services and their enhanced access for the poor in the province.
The mission also held a 'Stakeholder Consultation Meeting' in Quetta on April 22, 2004. The participants included around 40 representatives from province and local governments, Nazims and representatives of the NGOs, the bar, and the private sector.
The joint offer of around $800 million to help Pakistan undertake a five-year MCRP to rehabilitate Karachi, Lahore, Rawalpindi and Peshawar has generated interest. It has been the subject of editorial comments. Besides the joint offer, the ADB has been exploring a programme for the development of Balochistan through a loan of about $120 million for multiyear Balochistan Resource Management Programme (BRMP) during 2004.
The ADB Country Director, in a statement reportedly said that the overall objective of the BRMP is to reduce poverty through better fiscal and financial management; to consider arranging adequate financial resources to the local governments for the bulk of service delivery; and to find lasting solutions to the water resource problems in the province.
The BRMP is not very different from the MCRP for the four cities and therefore the discussion here would also be relevant to the BRMP for Balochistan.
This paper is an attempt to flag pertinent points for the attention of the federal, provincial and the city/district governments and to offer suggestions to all the stakeholders for making the best of the rehabilitation effort.
The World Bank and the ADB, the two most importance IFIs in the world, are the source of loan funds for various development projects.
At a time when the own funds of a country are the financing of development, loans and grants from these IFIs, in my opinion, are the next best source.
However, the benefits of loans from these IFIs are linked to the care in the selection and preparation of development projects; negotiation of terms and conditions attached thereto; and close monitoring of the implementation process. After all, they are also lenders.
The government is urged to co-ordinate the activities at the federal, provincial and city / district government level and to assign these functions to the dedicated groups of properly qualified and experienced officers.
Appointment of a sufficient number of right people at all the three tiers of the government and the selection of priority projects out of a long list of candidates might initiate the rehabilitation exercise in a proper manner.
In such long term programmes, it is always better to appoint a sufficient number of officers at different level. The middle and junior level officers mostly share the work load and would in due course be groomed for higher responsibilities.
The type of work to be undertaken under both the programmes is considered to be somewhat new. It would be a good idea if all the officers are exposed to extensive orientation / training before the start of the two programmes.
The Pakistani teams can be strengthened through association of local experts/reputed consultants on a long-term basis.
Our existing foreign currency debt is estimated at around $36 billion which is nearly three times of our annual exports. The government is conscious of the difficult debt situation and, despite further borrowings for development; it aims to reduce the overall outstanding debt in future.
This could be possible through restricted future borrowings, timely debt service from own resources and on top of that use of privatisation proceeds to retire costly debt.
Failure in observing any of these three factors would expose the country to still higher debt level and the complications associated therewith. Such an embarrassing event can be avoided through better governance and stricter control over development expenditure financed through foreign currency loans.
The loan funds jointly offered for MCRP as well as the ADB offer of loan for BRMP, would eventually add to the overall foreign debt.
In addition, there are a number of development projects in the pipeline for possible financing from the IFIs and other sources. Besides the federal and provincial government projects, the City District Governments of Karachi and Lahore as well as the Public Sector Enterprises (PSEs) such as Pakistan Steel have their own development projects, for realisation of which they will also be availing loan facilities from different sources including the IFIs.
Naturally, this would enhance the overall foreign currency debt stock as well as the debt servicing burden; possibly to the levels that are not sustainable.
The government might carefully review and prioritise each project and consider taking up with the IFIs, only selected components of the high priority projects, which otherwise cannot be financed locally or through other more appropriate foreign funding.
The federal government might have to devise appropriate criteria for prioritising and selection of urban infrastructure projects for loan financing from the IFIs.
Karachi, Lahore, Rawalpindi and Peshawar, selected for MCRP have suffered in the past due to common reasons such as shortage of funds, wastage of resources, internal bickering and petty politics, carefree attitude of the people in power, red tape and vested-interest, pressure on utilities due to migration of people from rural areas, etc.
The cities also suffered as many of the city stakeholders were enjoying the benefits but were not contributing for building or maintaining the city infrastructure. It is only recently that the Karachi Port Trust (KPT) has started taking more interest in the planning and implementation of infrastructure development projects.
Situation in Karachi and for that matter in other selected cities would improve fast if other stakeholders also join in the effort and help develop and finance the physical infrastructure.
The reasons mentioned above can be removed if all of us do the soul searching and initiating corrective measures.
The federal government might consider a joint meeting of all these cities and the concerned officials and asked to improve operations through remedial measures.
The mega cities in the country are suffering from shortages of water, electricity, gas, transportation and housing, besides problems of sewerage, waste disposal and sanitation. Roads are in a very bad shape and absence of link roads, overhead bridges/underpasses cause traffic congestion's at a high economic cost. One point of view is to discourage migration of population from the rural areas.
The inflow could be brought down if rural areas are provided with more economic opportunities and a socio-economic infrastructure on a priority basis.
However, it might not be very practicable now as the government does not have the resources for that.
Inflow of population has beneficial aspects as well. City dwellers generally loath hard physical labour for building infrastructure projects.
Moreover, many migrating people bring capital, knowledge and expertise, all of which are in high demand internationally even in the capitals of the developed countries.
The inflow might be taken into account in the planning process and all new projects and utilities should be designed accordingly. Through frank discussions the situation in each city can be better understood.
This process might help chalk out a future course of action including the programme components for which financial/technical assistance from the IFIs would be beneficial.
In the absence of a duty-approved master plan and without proper home-work by the concerned authorities, the discussion might not be meaningful for further planning or seeking assistance from the IFIs.
All cities are in bad shape more due to poor collection of solid / municipal waste, overflowing sewerage's with no or little arrangement for treatment of municipal or industrial effluents.
This has mostly contaminated potable water being distributed in the cities. Compost plants for processing of solid waste or waste to energy plants are being considered in different cities but actual progress has been slow. It is proposed that the rehabilitation of these areas might be prioritised.
Under the MCRP, the two IFIs would reportedly be holding high level talks with the government to finalise the Action Plan, which would aim at removing air pollution and rehabilitating roads and important buildings.
In addition, details would be discussed on how to help improve water supply, sewerage, sanitation and solid waste management of these four cities. It is suggested that institutional and organisational arrangements might be considered and improved by the government prior to start of discussions with the IFIs.
Officers from the three tiers of the government might attend the meeting and decide on the priorities of project elements for each of the mega city. It is possible that many of the things under MCRP can be locally financed for which the government might consider to induce the banking sector to come forward.
In the meantime, the government might consider setting up the Municipal Bank in each province to assist the government in matters to be taken up with the IFIs.
These banks in due course would be financing some of the needs of the mega cities. These banks would be concentrating on financing development needs of the cities presently not included for rehabilitation under MCRP.
Of all the cities included under MCRP, Peshawar is said to be really in the worst shape and therefore needs rehabilitation on urgent basis. However, the ADB Country Director has been quoted as saying that Lahore and Karachi would be considered for early rehabilitation.
It is suggested that work on rehabilitation of all cities might be started concurrently. Also, Quetta and Hyderabad, being the most under-developed cities, might also be made a part of MCRP.
The city/district governments generally have real or perceived differences with the provincial governments on matters such as allocation of functions, delegation of powers, sharing of funds, transfer of institutions / utilities in the spirit of power devolution, etc.
The nature and severity of difference might not be the same in all the areas but it appears the relations are not as harmonious as desirable for accelerated development of the cities.
The stakeholders are urged to amicably resolve the differences, if any, prior to start of discussion with the IFIs and their consultants on MCRP and BRMP.
The ADB team with PPTA consultants has already met the Chief Secretary, Government of Balochistan on April 21, 2004. It has been said that a team of consultants would be travelling throughout Balochistan over the coming weeks to conduct technical studies and hold wide-ranging consultations on the design of the proposed program, of which one major focus is to find ways to improve the provincial government's financial position and to support better arrangements for the planning and financing of delivery of key services like health, education and water supply at local government levels.
This appears to be a wide-ranging programme spread over many areas of critical importance. The government might consider giving more attention to BRMP and transfer experienced officers for supporting the provincial authorities. Further, there might be the need to induct Pakistani consultants for many of the programme components, financed by the federal government.
The government might consider urging the trade, industry and institutions from other provinces to undertake in Balochistan welfare projects such as schools, colleges, health units and water schemes, etc for supporting the provincial authorities and the improving the life of the people.
Normally, the achievement of the project objectives is directly linked to the value-for-money achieved in implementation. The higher the value for money achieved the better impact on the quality of life of the affected people.
The implementation of the MCRP and BRMP should be made, through good governance more efficient and orderly, with proper monitoring of the pace and quality of work and strict auditing of the expenditure.
The aim should be to keep wastage and leakage's to the minimum and make the entire process cost-effective. Proper procurement is the key for success in implementation of projects. Procurement practices by which corruption has been minimal should be studied for wider application for procurement in other parts of the country.
Transparency International Contract when used in Karachi's K-3 water project has reportedly yielded good results. This should be studied and might be adopted for use in all other mega projects.
The cities might be required to improve operations through good governance. As part of the MCRP, the cities might be asked to raise own resources by rationalisation of charges for water, sewerage, fire, waste collection, property taxes and better recovery.
The cities might be required to submit cash flow projections in support of their loan request for rehabilitation project and should demonstrate that they will be in a position to service the debt from own cash generation and would not be dependent on the government. If any land is to be sold to generate funds, the sale should be advertised well in advance and sale to be made in a transparent and fair manner.
The cities might be asked to confirm that status of land allocated for amenity projects would not be changed under any circumstances.
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