FISCAL REVIEW 2011 - Ferocious floods and the gibberish government

It has been a year since the great floods started their ravaging course in Pakistan. The resource-strapped government - caught between the devil and the deep blue sea - received incredible shellacking for its handling of the disaster.
It must be acknowledged that the phenomenal scale of disaster and the snow-balling devastations were beyond the financial and organisational capabilities of any single entity. In this backdrop, the government's overall handling of the flood relief and reconstruction activities needs to be objectively assessed.
Before digging into what the government did or did not do, it is pertinent to revisit the scale of this disaster. According to the Economic Survey of Pakistan (2011), the 2010 monsoon floods killed more than 1,700 people, injured about 3,000, affected over 20 percent of land area, and disrupted lives of more than 20 million people. The floods caused colossal loss to transport and communication infrastructure. Around 392,786 houses were partially damaged and 728,192 were completely destroyed. Apart from widespread loss of assets, livestock and personal belongings, more than 2 million hectares of standing crops were damaged or lost.
DISASTER MANAGEMENT
Pakistan's government machinery responded to the floods at three levels:
federal, provincial and district.
At the federal level, National Disaster Management Authority (NDMA) was the main government body which co-ordinated disaster response efforts of various federal government departments, armed forces, UN agencies and donors. It also took the lead in mobilisation, reception and deployment of relief goods. The Economic Affairs Division (EAD) co-ordinated with donor agencies.
In the provinces, response activities came under the leadership of provincial chief ministers under which the chief secretaries employed provincial disaster management authorities (PDMAs). District-level response was undertaken by district co-ordination officers, under whom executive district officers were liable for early rescue and relief efforts.
According to the 'Flood Reconstruction Unit' at the Planning Commission, the government launched an unprecedented rescue operation with the support of UNDP and friendly countries. 60,000 military personnel, 67 helicopters, all available C-130 planes, 1,238 boats, along with volunteers and NGOs undertook the task to rescue 1.4 million marooned people, provided them with 0.4 million tons of rations, 488 thousand tents, 931 thousand tarpaulins, 1.9 million blankets and medical care to 5.9 million persons.
With the help of the United Nation's (UN), NDMA launched a 12-month, early recovery phase under "Pakistan Flood Relief and Early Recovery Response Plan", worth $1.9 billion in November 2010. Call it 'donor-fatigue' or 'Pakistan-fatigue'; the $2 billion appeal by the UN for flood survivors still remains 30 percent unfulfilled.
INTERNATIONAL ASSISTANCE
This disaster affected many more people compared to recent world disasters; however foreign assistance was not in sync with the devastations whose sheer scale took months to put a clear estimate on. Low death toll compared to other major world disasters, and little international media coverage accompanied with bad local press vis-à-vis governance and transparency issues could be responsible.
According to information compiled by the UN's Office for Co-ordination of Humanitarian Affairs (OCHA), as of July 6, 2011 roughly $2.6 billion of funding originated from foreign sources. These include donor agencies, governments, corporations and individuals. (Here funding means contributions, both cash and in kind, plus legally binding commitments). Roughly $381 million in pledges are still uncommitted.
There is an interesting pattern in the international response. Much of the international assistance channelled through the Pakistani government was in kind, eg relief goods. The most preferred channel for liquid and project assistance was through the UN agencies, followed by international NGOs and local NGOs. The floods seem to have swept away donor trust in the government too.
Over one-fourth of foreign assistance was committed by the United States, followed by private individuals & organisations (14.1%), Japan (11.8%), the United Kingdom (8.8%) and the European Commission (7.2%). Data from the finance ministry (updated only till January, 2011) shows that the EAD could not expedite the aid flows as only 22 percent of international commitments were fulfilled. Only 23 percent of the $2.1 billion cash assistance pledges were disbursed, while only 26 percent of in-kind assistance had been delivered. The government officially discontinued the flood rescue, recovery and relief operations in January 2011 and its focus is now on reconstruction.
RECONSTRUCTION PLANS
The 'Damage and Needs Assessment' (DNA) report - co-sponsored and released by the World Bank and the Asian Development Bank (ADB) in November 2010 - has been used by the government for reconstruction plans. The DNA report estimated a colossal loss of Rs 855 billion due to the 2010 floods (see the table).
The DNA report also developed three options for post-flood reconstruction. Under option 1, only the replacement of the lost infrastructure and restoration of livelihood, trade and business activities would be undertaken. This would cost Rs 578 billion ($6.8 billion).
Option 2 put costs at Rs 630 billion ($7.4 billion) and represented building back the damaged infrastructure better. Option 3 focused on future flood protection, and costs Rs 758 billion ($8.9 billion). Compared to others, option 3 aims at better and safer reconstruction with special emphasis on following safety standards for housing, irrigation and agriculture infrastructure. Monsoon rains fall every year and there are always inherent risks of excessive rains and subsequent floods. Mere replacement of damaged infrastructure would not stand its ground when calamity strikes.
But that was not to be taken into account!
National Flood Reconstruction Plan 2011 (NFRP) stated in February 2011 that "in view of current financial constraint being faced by Pakistan, reconstruction effort is restricted to Option 1, the least costly".
Building back better and safer would be indeed Rs 180 billion costlier than the chosen alternative; however it would have ensured that Pakistanis do not end up throwing good money after bad. According to NFRP, reconstruction (read replacement) would cost Rs 613 billion, which is Rs 35 billion higher compared to the DNA report's estimate of Rs 578 billion due to revised housing compensation figures. The government will finance reconstruction costs from three sources (see the table).
To finance post-flood relief & reconstruction, the federal development plan in FY11 was reduced from Rs 290 billion to Rs 196 billion while provincial plans were reduced from Rs 430 billion to Rs 270 billion. Under phase 1 of the Rs 177 billion 'Citizens Compensation Scheme', Rs 32 billion were disbursed in FY11. As of February 2011, commitments for the reconstruction phase amounting to Rs 208 billion ($2.45 billion) have been made by China, Saudi Arabia, ADB, World Bank, Abu Dhabi, Japan, Oman and Norway.
Bulk of the reconstruction would be required in transport and communication infrastructure, especially in Sindh, Khyber Pakhtoonkhwa and Federal areas. Education and irrigation sector reconstruction would also receive extensive funding, especially in Sindh (see the table).
According to NFRP, the reconstruction process would be complete in all but four sectors by 2014. Infrastructure in the transport & communication, irrigation, education and environment sectors would be fully replaced by 2015, owing to the fact that these constitute over 90 percent of infrastructure reconstruction costs. The Council of Common Interests will provide policy guidance to federal, provincial and district governments. 'National Oversight Disaster Management Council' will be the monitoring authority.
LESSONS LEANT IN TIME Pre-emption is always better than cure. However, the government doesn't seem to get it and is going ahead with the 'replacement' of damaged and destroyed infrastructure. Also, Pakistan's flood forecasting and early warning system (FLEWS) is outdated. It is now being upgraded with technical assistance from UNESCO through a $3.5 million grant from Tokyo; however it will take at least two years to be operational.
Although NDMA did all it could, its capabilities and resources fell short of the sheer scale of this disaster. More funds should be earmarked for the operational preparedness of the authority. At a time when national harmony was needed the most, there was an acute disconnect between political leadership and the masses. Government largely ignored domestic resource mobilisation and clamoured outwards for assistance right from the onset of floods.
In the absence of a concerted flood relief initiative, haphazard and often overlapping relief efforts led to a waste of valuable resources, time, and money. One important thing is to have a multi-pronged strategy which explores all possible avenues of assistance, local and global. However, world philanthropy would always tend to the latest catastrophe around and this represents a challenge for the government to be realistic about foreign aid expectations for post-flood reconstruction.
This year again, flood fears are looming large. According to the UN, two to five million Pakistanis could be hit by floods. The vulnerabilities and negative consequences would be much greater because concerned authorities are struggling to reconstruct dykes and embankments, and the displaced are still reeling to rebuild their homes.
If the government could not stop destruction, it can certainly do better with reconstruction and avert a disaster from reaching an unmanageable magnitude. However, government's short-sightedness and convenient excuses are set to fail and cause millions of Pakistanis to come to grief. Let us hope Pakistan develops some resilience and capacity to cope with the floods before they strike again. The writer is a Research Analyst at Business Recorder. He can be reached at [email protected]

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SECTORAL DAMAGES AND RECONSTRUCTION COST (RS BN)

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                      Damages   Reconstruction    Infrastructure   Citizens   Private Sector/

SECTORS                (DNA)*      Cost (DNA)*    Reconstruction     damage     Compensation    PSEs

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                                                       HARD            SOFT**

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Transport & Comm.         113         200               175              21              -         4

Irrigation                 24          37                35               2              -         -

Energy                     26           9                 5               1              -         3

Agriculture               429          22                 4               2             16         -

Education                  27          43                38               5              -         -

Health                      4           4                 3               1              -         -

Water & Sanitation          9           6                 5               1              -         -

Environment                 1          18                10               8              -         -

Governance                  6           5                 4               1              -         -

Disaster Risk Mgt.          -           2                 -               2              -         -

Housing                   135         126                 -               -            126         -

Private Sector             24           9                 -               -              -         9

Livelihoods Support         -          58                 -               -              -        58

Financial Sector           57          39                 -               -              -        39

TOTAL                     855         578               279              44            142       113

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-- Preliminary Report on flood's Damage and Needs Assessment (DNA) by GOP, ADB and WB (November 2010)
-- Capacity building, social safe guards, project management, studies, policy support, etc.

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Reconstruction Program Summary (Rs Bn)

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ITEM NEEDS INDICATIVE FINANCING

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Government infrastructure*    323       Development budget

Physical infrastructure       279

Soft Infrastructure            44

Transfer & Subsidies          177         Recurrent budget

Housing                       161

Agriculture                    16

Private Sector/PSEs           113               Off budget

Total                         613

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