WB identifies ‘high risks’ to Punjab Urban Land Systems Enhancement project

ISLAMABAD: The World Bank has identified high risks to the $150 million “Punjab Urban Land Systems Enhancement project” including political, governance, and macroeconomic.

The World Bank’s Board of Executive Directors has recently approved the Punjab Urban Land Systems Enhancement project aimed at strengthening land administration and facilitating housing authorities’ efforts to identify suitable areas and public lands for affordable housing developments in the Punjab province. The project will support the provincial government in upgrading its land registry by creating a digital, province-wide inventory of lands and deeds. More than 38 million people are expected to benefit from land registration, which will not only improve tenure security, but also formalise land and property ownership.

However, official documents revealed that overall key risks and mitigation measures are rated substantial or high.

The projects documents noted that political and governance risks are substantial. The project would require long-term political ownership and will be implemented in a complex political context with multiple actors at various tiers of government.

Groups benefitting from the inefficiency of the existing systems have a strong vested interest to resist the changes and may lobby against project activities. The Land Records Management and Information Systems (LRMIS) project successfully addressed such resistance through strong engagement with senior bureaucrats and policymakers. These risks will be managed by using a similar approach and by continuing extensive, regular, and collaborative engagement with key stakeholders in the province, particularly, the Senior Member of Board of Revenue (SMBR).

Further macroeconomic risk is likely to remain substantial, as fiscal and monetary tightening is expected to resume in fiscal year 2022. After contracting in fiscal year 2020 due to the adverse impact of the Covid-19, economic activity recovered in fiscal year 2021. Due to low-base effects and recovering domestic demand, real GDP growth (at factor cost) is estimated to have rebounded to 3.5 percent in fiscal year 2021 from a contraction of 0.5 percent in fiscal year 2020. However, in light of emerging external imbalances and higher domestic inflation, fiscal and monetary tightening are expected to resume in fiscal year 2022. Public debt will remain elevated in the medium term, as will Pakistan’s exposure to debt-related shocks. This outlook assumes that the IMF Extended Fund Facility program will remain on track. While the macroeconomic risks are external and not within the control of the project, Punjab Urban Land Systems Enhancement Project (PULSE) will help reduce the fiscal burden of the province by providing underlying data and strengthening systems for improving the collection of property tax and property transfer stamp duties (two of the three largest revenue potential sources in the province).

Further institutional capacity and sustainability risks are substantial. Board of Revenue (BoR) is a key department of the government of Punjab and has recent and ongoing experience with multilateral agencies. Punjab Land Records Authority (PLRA) has significant experience on WB procedures under the LRMIS project, strong capacity in the computerization of land records, and in the provision of efficient, affordable, and community supported land registration services. PDMA has GIS and spatial analysis skills and current experience as an implementing agency on a WB-funded project. However, the Directorate of Land Records (DLR) under BoR does not have dedicated and experienced staff, as it has been mostly functioning as a regulator. There could be capacity issues because the DLR would need to undertake most of the field activities.

Capacity issues exist in government departments, which could result in inefficiencies and delays in the project deliverables. Additional issues are related to staffing, noncompliance with rules and procedures, and weak internal controls. The fiduciary risk will be mitigated through the hiring dedicated FM and procurement staff in the PMU and the Project Implementation Unit (PIUs), provision of training, better internal audit controls, use of improved accounting software, and close Bank support.

While environmental risks are rated moderate, social risks are rated high given the contentious nature of land tenure in Punjab, particularly in the context of widening social and economic inequalities.

The impact of the Covid-19 pandemic poses risks to at least the start of implementation, including restrictions on mobility. These could cause a longer implementation period for cadastral surveys and other activities requiring fieldwork.

The project will be implemented by the Punjab BoR, based on the institutional mandates and the administrative authority of land-related laws relevant to PULSE’s objectives.

Copyright Business Recorder, 2022