Strengthening state capacities in newly-merged areas of KP: Basic services, rural infrastructure: World Bank board approves $200m

ISLAMABAD: The World Bank’s Board of Executive Directors has approved $200 million in financing to strengthen state capacities to deliver basic services and climate-resilient rural infrastructure in the newly-merged areas of Khyber-Pakhtunkhwa, including investments for post-floods rehabilitation and reconstruction.

The Khyber-Pakhtunkhwa Rural Investment and Institutional Support Project (KPRIISP) is the first phase of a multiphase programmatic approach that aims to increase access to resilient and reliable basic services for rural households in the newly-merged areas of Khyber-Pakhtunkhwa.

Under this first phase, investments will focus on strengthening state responsiveness and facilitating citizen-driven service delivery, as well as rehabilitate infrastructure affected by the devastating floods of summer 2022.

“KPRIISP aims to address development gaps in rural areas that are among the poorest in the country, directly benefiting around 5.5 million people by extending public service delivery systems, investing in basic infrastructure like water supply and sanitation, and boosting agricultural productivity and livelihood opportunities,” said NajyBenhassine, World Bank country director for Pakistan.

“It will also support post-floods reconstruction and rehabilitation, while strengthening resilience to such climate-related shocks, particularly in the newly-merged districts of the province.”

The project will support the extension of state systems to deliver public services in the newly-merged districts as well as investments in critical and basic rural infrastructure. It will also support emergency reconstruction and rehabilitation of flood protection infrastructure damaged by the 2022 floods.

Infrastructure investments in water supply and sanitation, rural roads, agriculture, and irrigation will be done in a way to strengthen climate resilience in the face of the increasing frequency and severity of extreme weather events in Pakistan.

“In addition to investments in critical infrastructure, this new project will provide conditional grants to village councils to finance local infrastructure priorities in line with community preferences and women’s priorities,” said Anna O’Donnell, Task Team Leader of the project.

“It will also ensure that communities are involved in participatory planning, budgeting, monitoring, and improving social accountability systems while focusing on institutional strengthening and capacity building of village councils.”

The project documents noted that the overall risk rating of the project is rated as Substantial. Risk categories have been rated based on residual risks, considering the efficacy of the risk management measures included in the project.

The risk ratings of the project are given below. Political and governance risk is Substantial. The GoKP and the GoP demonstrate a strong political commitment to the project, given the need to accelerate development in the project areas.

While the project interventions are expected to remain a priority, they are being rolled out against a backdrop of regional security challenges, political uncertainty due to nationwide protests arising from escalating tensions between political parties, and upcoming general elections. The project investments represent a political priority that has, to date, sustained across election cycles.

The project aims to address some of these risks by anchoring the project coordination with the P&DD and by prioritizing investments to support a positive state presence, engaging a broad spectrum of citizens through localized investments to improve citizen-state relationships in the project areas.

The project will further mitigate risks through frequent monitoring and oversight of the evolving security situation and by retaining an adaptive and flexible implementation approach. The documents further noted that macroeconomic risk is high.

The GoP is facing a difficult macroeconomic situation, exacerbated by the 2022 floods that have put pressure on support to relief and recovery while maintaining progress towards macroeconomic stabilization and critical structural reforms.

Significant risks include the potential worsening of external conditions, further natural disasters, and a slowdown or reversals in policy adjustment in the run-up to elections.

Realisation of these risks may lead to macroeconomic instability, with major impacts on economic activities, prices, and household incomes, thereby impeding achievement of project results. Risks are partly mitigated by the WB support to structural policy reforms in the fiscal and power sector areas, as well as the ongoing IMF-EFF program, which supports sound economic management practices and continued progress on critical structural reforms.

At the project level, it is expected that the GoKP will continue to prioritize allocation of government financing to the newly-merged areas, given the high political priorities of the program.

Copyright Business Recorder, 2023