POVERTY REDUCTION STRATEGY PAPER ON NWFP(KPK)

8/10/2019 POVERTY REDUCTION STRATEGY PAPER ON NWFP(KPK)

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POVERTY REDUCTION STRATEGYPAPER

ON

NORTH WESTERN FRONTIER PROVINCE OF PAKISTAN

PLANNING AND DEVELOPMENT DEPARTMENTGOVERNMENT OF N.W.F.P.

April 2003


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ACRONYMS AND ABBREVIATIONS

ADB Asian Development BankAIT Agriculture Income TaxAWB Area Water BoardsCBO Community Based OrganizationCCO Citizen Community OrganizationCRPRID Centre for Research on Poverty Reduction and Income DistributionCWD Communications and Works DepartmentDAC Departmental Account CommitteeDAO District Accounting OfficerDCO District Coordination OfficerDFID Department for International DevelopmentEIROP Essential Institutional Reform Operationalization ProjectEMIS Education Management Information SystemEOBI Employees Old-age Benefits InstitutionFBS Federal Bureau of StatisticsFMC Fiscal Monitoring Committee

GAVI Global Alliance for Vaccination InitiativeGTZ German Development CorporationHMIS Health Management Information SurveyHR Human ResourceIM&R Instructional Materials and Minor RepairIPRSP Interim Poverty Reduction Strategy PaperLHW Lady Health WorkerM&E Monitoring and EvaluationMICS Multiple Indicators Cluster SurveyMTBF Medium Term Budget Framework

NAB National Accountability Bureau NGO Non governmental Organization NWFP North West Frontier Province

O&M Operation & MaintenanceP&D Planning and DevelopmentPAC Public Accounts CommitteePFAA Provincial Financial Accountability AssessmentPIHS Pakistan Integrated Household SurveyPRP Poverty Reduction PlanPRSP Poverty Reduction Strategy PaperPSC Public Service CommissionPTA Parent-teacher AssociationsSBP State Bank of PakistanSDC Swiss Development CorporationSME Small and Medium EnterpriseSPDC Social Policy Development CenterSWOT Strengths, Weaknesses, Opportunities and ThreatsUNDP United Nations Development ProgramWAPDA Water and Power Development Authority


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TABLE OF CONTENTS

Executive Summary i

Chapter 1 Introduction 1

Chapter 2 Poverty in NWFP 3

Chapter 3 PRSP Dialogue The Consultative Process 11

Chapter 4 The Poverty Reduction Strategy 14

Chapter 5 The Medium term Budgetary Framework 40

Chapter 6 Monitoring and Evaluation 44

Annex 1 Poverty in NWFP 47

Annex ll: Gender 60

Annex lll Policy Matrix NWFP Structural Adjustment 64

Annex lV: Pakistans IPRSP Summary 72

Annex V Decentralization in Pakistan 80


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ACKNOWLEDGEMENTS

This document reflects an extensive process of consultations and builds on the ongoingPoverty Reduction Plan of the Government of the NWFP.

Thanks are due to the Nazims and elected Governments as well as the DistrictCoordination Officers and staff of all the districts of the NWFP for their input into thisstrategy. Thanks are also due to the Secretaries and staff of all the line departments of theProvincial government for their input.

This strategy reflects the hard work of the Planning and Development Department of theGovernment of the NWFP who worked zealously to put it together in a very short time.

The financial assistance and technical support of UNICEF and especially its local officein Peshawar is also gratefully acknowledged


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EXECUTIVE SUMMARY

NWFP is by far the poorest province of Pakistan, with an overall incidence of povertysubstantially higher than that for the country as a whole (poverty headcount in 1998-99

for NWFP is 43% as compared to 33% for Pakistan). Both urban and rural poverty in NWFP are higher than that for the entire country (poverty headcounts for urban and rural NWFP are 31% and 47% respectively, compared to 24% and 36% respectively for all ofPakistan). Moreover, the depth of both urban and rural poverty, measured by the povertygap is relatively higher for NWFP than for the rest of the country. Consistent with the

poverty estimates, the average per-capita consumption expenditures are also lower for NWFP vis--vis the rest of the country.

Poverty in NWFP has changed significantly over the decade. The trends are very mixeddepending on the choice of the base year for comparison. If 1990-91 is compared to1998-99, then urban poverty in NWFP appears to have declined substantially (by close to

6 percentage points) even more than the decline in national urban poverty. Meanwhile,the rural poverty in NWFP seems to have increased by more than 4 percentage pointsover the same period. However, it is also important to note that notwithstanding thedecline in urban poverty in NWFP during this period the urban areas in this province stillremain the poorest in the country by a large margin. And even more alarming is the factthat if there is a comparison between 1993 and 1999 then the available evidence indicatesa dramatic and consistent worsening of poverty in NWFP in both the rural and urbansectors

Several characteristics of poverty in NWFP based on the available research are listed below:

NWFP faces difficult challenges due to its geography, history and location NWFP is the poorest Province of Pakistan NWFP has poor social indicators and highest gender disparity Gender gaps are significant for all socio-economic indicators in NWFP Gender gaps tend to be wider in rural areas than in urban areas of NWFP. Gender gaps in NWFP are found to be larger than for the country as a whole Land ownership in rural NWFP is less concentrated than for the rest of the country,

and there is prevalence of small landholdings, low agriculture productivity and highrural poverty

A large proportion of the paid employees in the urban sector of NWFP are engaged aswage labor in the informal sector, which is a significant employer in urban areas. The

poor have relatively low access to safe drinking water and sanitation facilities.Availability of safe drinking water and sanitation facilities is characterized by large rural-urban gaps in NWFP. In terms of access to safe water and drainage in NWFP both urbanand rural sectors alike fare significantly worse than the country as a whole


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NWFP has a limited resource base Provinces own revenues are low and its fiscal position has deteriorated during 1990 Provinces financial management has remained weak

Much of provinces economic potential is still unexploited while this is at present amajor weakness it also offers a major opportunity in the future.

In addition to using the individual characteristics of poverty geographic targeting also provides an effective method for improving the efficiency of resource use for povertyreduction. This paper uses levels of deprivation to rank districts. The deprivation indices

presented here are based on the recently released Government of the NWFP MultiIndicator Cluster Survey 2001 data set. These data were especially collected with supportfrom UNICEF to provide district-level indicators and benchmarks for poverty reduction.

The overarching objective of the Poverty Reduction Strategy for the NWFP is poverty

reduction through efforts to restore good governance and the respect for the rule of law,enhance the effectiveness of public expenditure especially in the key social sectors andre-establish the integrity of state institutions and their accountability to the public. Ofcourse, no poverty reduction strategy can be complete without efforts to promote pro-

poor growth. The PRSP for the NWFP, therefore, has the following five main pillars withstrengthening governance to improve public service delivery as the central cross cuttingtheme:

1. Governance reforms to achieve an efficient, accountable, and service orientedcivil service;

2. Reforms to improve service delivery in key sectors (especially basic socialservices); Fiscal and financial management reforms to improve governance in

budget and financial management,3. A medium term budget framework (MTBF), enhance effectiveness and

accountability of expenditures, and strengthen resource mobilization;4. Promote sustainable private sector development to accelerate economic growth.5. Addressing vulnerability to shocks

Given the larger gender disparities in the NWFP mainstreaming gender is an essentialelement of all strategic interventions proposed here. It is not only important from a rights

based perspective but is also the most optimal poverty reduction strategy given the easewith which more than fifty percent of the poor can be targeted.

This strategy is based on an extensive consultative process that was initiated in December2002. These consultations covered the entire Province and involved stakeholdersmeetings at the grass roots level for the identification of the perceived strengths,weaknesses, opportunities and threat in each district and sector, as well as therecommendations to ensure opportunity, security and empowerment so necessary foreffective poverty reduction. Based on this consultative process, it has become quite clear


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that for the five pronged strategy to be successful the following basic measures mustadopted:

Training and support to enable the local Governments to think along modern linesin order to enable them to function as sustainable entities with proactive planningfor the development and promotion of all available resources at the district level

Specific training for the local Governments to enable them to prepare business plans and advertise the business and tourism possibilities in their districts alongmodern lines.

Strengthening of the office of the District Planning Officer with equipment andtraining to act as a Business Development and Support Units for all the citizens ofthe districts. This office would be charged with providing essential links to the on-going national level support initiatives such as SMEDA, Qaumi Zarat Bank,Khushali Bank and other initiatives that can be tapped to develop the small andmedium industries and the agriculture sector. These offices should act as conduitsfor business promotion in the districts and for attracting investment and findingmarkets to assist the local inhabitants. Over time these offices will be in a positionto charge a fee for such services.

Initiating district level studies to assess how best to develop and promote thecomparative advantage of the Province, in particular horticulture and vegetablefarming; processing and marketing of foods, development of timber and non-timberforest products; and the exploitation and development of minerals and gem stoneson modern business lines;

Setting up Poverty Reduction Associations of concerned well to do citizens withlogistical support from the District Governments to evolve and implement schemesto improve the opportunity, security and empowerment of the vulnerable at thegrassroots level. These associations should also be charged with ensuring that all

such schemes are environmentally sustainable and biodiversity conserving and provide adequate opportunities to the vulnerable especially women. In additionthese associations can serve as the focal mechanism for the supervision anddistribution of basic food items at cost price to the poor and vulnerable as well asthe provision of basic cooked food ( dal and roti at designated tanoors ) to thedestitute in each locality through informal collections from philanthropists in andaround the area.

The detailed Medium Term Budgetary framework presented here was agreed upon by theGovernment of the NWFP in line with the initiatives proposed under the four pillars ofthe original Poverty Reduction Plan in 2001. The Monitoring and Evaluation Framework

with the clear designation of responsibilities and next steps was also agreed upon at thattime.

Risks to the success of the overall strategy for NWFP include backsliding on the keyfiscal and financial steps committed to by the Government of NWFP in 2001 as part ofthe conditionality for the World Bank structural adjustment credit. Additional risks comefrom the lack of smooth functioning of the devolved local government; the lack ofeffective consensus building amongst the district level government and elected officials


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to ensure ownership of the poverty reduction strategy; and lack of momentum in theoverall national PRSP efforts.


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CHAPTER 1. INTRODUCTION

This Poverty Reduction Strategy Paper (PRSP) for the North West Frontier Province

reinforces the poverty reduction strategy for Pakistan. Within the overall parameters ofthe national PRSP the strategy for the NWFP integrates the existing Provincial PovertyReduction Plan (PRP) and the Medium Term Budgetary Framework into a three-yearstrategy. The PRP for the NWFP was built on four pillars that more or less overlappedthe national Interim Poverty Reduction Strategy Paper (I-PRSP). The NWFP PRPhowever, did not suggest any interventions for addressing aspects of vulnerability toshocks. In this important dimension the PRSP for the NWFP takes the strategicinterventions that are part of the national IPRSP as given and incorporates arecommendation for strengthening the informal system of philanthropy.

The unexploited strength of the NWFP economy lies, amongst other sources, in its

tremendous potential in its minerals, value-added agriculture, timber and non-timber products, hydel resources and potential for tourism development. This PRSP recognizesthat accelerating economic growth and generating employment for the poor is key to

poverty reduction. In this the private sector has to be the engine of growth. Such growthshould be based in the rural sector where the majority of the poor reside and where thehighest employment multipliers are evidenced.

The NWFP like the country as a whole is faced with the twin challenges of revivinggrowth and reducing poverty. There is realization that restoring economic growth andimproving access to basic needs, such as primary education, preventive health care, and

population welfare services, is essential for winning the fight against poverty. The

complex and multidimensional nature of poverty thus warrants a poverty reductionstrategy that ensures rapid pro-poor economic growth through sound macroeconomicreforms, improved access to social services, broad based governance reforms, andtargeted interventions Pakistans interim poverty reduction strategy I -PRSP put in placein November 2001 takes into account the economic, social, and governance dimensions.Like the national strategy this provincial strategy also emphasizes policies for economicand social development but also seeks greater involvement of the poor in the formulationof these policies and management of their affairs. The strategy aims at forging broad-

based alliances with civil society and the private sector in the quest for eliminating poverty and accelerating growth

The strategy is based on an extensive consultative process initiated in December 2002that covered the entire Province and involved stakeholders meetings at the grass rootslevel for the identification of the strengths, weaknesses, opportunities and threat in eachdistrict and sector as well as the interventions to ensure opportunity, security andempowerment so necessary for effective poverty reduction.

This consultative process is essential for ensuring ownership and hence sustainability ofany strategy. The strategic recommendations presented in this paper are backed by a well-


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defined Medium term budgetary framework. This framework enables expenditures to bedirected to the key areas and then tracked over the period of implementation.Additionally The paper also presents a Monitoring and Evaluation strategy which iscritical to the success of the poverty reduction strategy.

Pakistans I -PRSP is backed with a strong program of monitoring as well as capacitydevelopment, including that for gathering and analyzing information for impactassessment. The I-PRSP outlines new institutional mechanisms that will be employed forthe regular/periodic monitoring and evaluation of poverty reduction expenditures andcorresponding outcome indicators at the federal, provincial, and district levels. Theseinstitutional arrangements are presently evolving and will be finalized in consultationswith provincial governments. Key outcome indictors have also been suggested. The final

benchmarks and targets will be set after consultations with national and provincialstatistical agencies, federal line departments, and provincial governments.

The PRSP for the NWFP draws on these aspects of Monitoring and Evaluation. Its

eventual success will rest in the continuation of the reforms committed to under thestructural adjustment program by the Government of NWFP and on the ownership thatcan be built through an ongoing process of consultations. It is imperative, therefore, thatthe political consensus to the reform package underlying this strategy be obtained asquickly as possible and the process of consultations at the grass roots level be concludedas quickly as possible. The NWFP is the first Province to put together a draft PRSP.

The medium term prospects for economic growth for the economy of the NWFP as thefrontline province have been uncertain since September 11, 2001. This uncertainty hasserious implications for the stability of NWFP s macroeconomic and planning frameworkand can significantly undermine the reform efforts outlined in this PRSP. The strategy

presented here therefore is based on the assumption of ceterus paribus i.e. other thingsremaining the same.

This strategy paper is divided into six chapters. The Poverty Profile for NWFP issummarily described in the second Chapter. Details are presented in the Annexure. The

process of dialogue is presented in Chapter three. The strategic plan forms the fourthchapter. The medium term budgetary framework is described in the fifth chapter.Monitoring and Evaluation processes are described in the sixth chapter.


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CHAPTER 2. POVERTY IN NWFP

Poverty in NWFP should be understood in the broader context of poverty in Pakistan. 1 In

addition, understanding issues specific to poverty in the province also requires examiningthe concentration of poverty across areas within NWFP. Such an understanding can helpto inform policymakers by identifying priority needs and target groups for intervention.

Detailed analysis of the poverty situation in NWFP is presented in Annex I. A summaryis presented here to give context to the strategy presented in later chapters. The NWFP isthe poorest Province of Pakistan.

Table 2.1: Poverty Trends by ProvinceProvince FY93 FY94 FY97 FY99Urban Areas 20.7 16.3 16.1 22.4

Punjab 22.0 18.1 1.16.9 25.5Sindh 17.3 11.8 12.0 16.1

NWFP 25.3 26.9 27.2 29.2

Balochistan 31.8 16.8 23.0 24.3

Rural Areas 28.9 34.7 30.7 36.3

Punjab 26.5 33.9 28.3 36.0

Sindh 29.5 31.8 19.6 34.7

NWFP 37.0 40.0 43.4 44.9

Balochistan 28.1 37.9 42.5 22.5

Overall 26.6 29.3 26.3 32.2

Punjab 25.2 29.5 25.0 33.0

Sindh 24.1 22.6 15.7 26.6

NWFP 35.5 38.1 41.2 42.6

Balochistan 28.6 35.5 38.4 22.8Source: ADB (2002). Poverty in Pakistan: Issues, Causes and Institutional Responses

The overall picture of consumption /income poverty in NWFP corresponds closely withthat of Pakistan as a whole higher concentration of the poor in rural areas, loweraverage consumption levels in rural areas, and relatively higher inequality in urban areas.Moreover, as Table 2.1 shows that the 15 percentage point rural-urban gap in headcountrates for NWFP in 1998-99 is higher than that for the whole of Pakistan and second onlyto Sindh among all provinces. The high rural-urban gap has all the more significance foroverall poverty in NWFP - since the province is much more rural than the country as a

1 The source for all data , unless otherwise specified, is the Pakistan Integrated Household Survey (1998/99). Morerecent data for the PIHS 2000-1 are not used because of the as yet unresolved controversy associated with theeducational enrollment and other numbers based on this data set. The data from the NWFP MICS are also not used.These data require further analysis for validation.


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whole. Around 85% of the NWFP population lives in the rural areas as compared toabout 72% of the countrys population. Meanwhile, the rural areas of NWFP account foraround 90% of the total number of poor people in the province. NWFP is by far the

poorest province of Pakistan, with an overall incidence of poverty substantially higherthan that for the country as a whole (poverty headcount for NWFP is 44%, compared to

33% for Pakistan). As shown in Table 1, both urban and rural poverty in NWFP arehigher than that for the entire country (poverty headcounts for urban and rural NWFP are31% and 47% respectively, compared to 24% and 36% respectively for all of Pakistan).Moreover, depth of both urban and rural poverty, measured by poverty gap is relativelyhigher for NWFP than for the rest of the country. Consistent with the poverty estimates,the average per-capita consumption expenditures are also lower for NWFP vis--vis therest of the country.

High Rural Poverty

The overall picture of consumption /income poverty in NWFP corresponds closely with

that of Pakistan as a whole higher concentration of the poor in rural areas; loweraverage consumption levels in rural areas; and, relatively higher inequality in urban areasThere is a 15 percentage point rural-urban gap in headcount rates estimated for NWFP in1998-99. This is higher than that for the whole of Pakistan and second only to the Sindh

province. The high rural-urban gap has all the more significance for overall poverty in NWFP - since the province is much more rural than the country as a whole. Around 85%of the NWFP population lives in the rural areas as compared to about 72% of thecountrys population. Moreover, the rural areas of NWFP account for around 90% of thetotal number of poor people in the province.

NWFP Poorest Province of Pakistan

NWFP is by far the poorest province of Pakistan, with an overall incidence of povertysubstantially higher than that for the country as a whole (poverty headcount in 1998-99for NWFP is 43% as compared to 33% for Pakistan). Both urban and rural poverty in

NWFP are higher than that for the entire country (poverty headcounts for urban and rural NWFP are 31% and 47% respectively, compared to 24% and 36% respectively for all ofPakistan). Moreover, the depth of both urban and rural poverty, measured by the povertygap is relatively higher for NWFP than for the rest of the country. Consistent with the

poverty estimates, the average per-capita consumption expenditures are also lower for NWFP vis--vis the rest of the country.

Inequality in NWFP, as measured by the gini coefficient for per equivalent adultconsumption, is very similar to that for the country, in both the rural and urban areas.

Note that overall gini for NWFP is slightly lower than that for the country, while theurban and rural ginis are identical. This apparent paradox is caused simply by the fact that

NWFP is significantly more rural (in terms of share of population) than the country as awhole, which means that the rural gini has a larger weighted in the average gini for

NWFP than for Pakistan.


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Poverty Trends in NWFP

Poverty in NWFP has changed over the decade. The trends are very mixed. In comparing1990-91 to 1998-99, urban poverty in NWFP appears to have declined substantially (byclose to 6 percentage points) even more than the decline in national urban poverty.

Meanwhile, the incidence of poverty in rural NWFP seems to have increased by morethan 4 percentage points over the same period; although the rural poverty headcount forthe country actually fell slightly over the same period. Poverty reduction in NWFP whencomparing the estimates for 1990-1 with those for 1998-99 appears to have occurred onlyin urban areas while rural areas have become poorer on the average. However, it is alsoimportant to note that notwithstanding the decline in urban poverty in NWFP during this

period the urban areas in this province still remain the poorest in the country by a largemargin. And even more alarming is the fact that if there is a comparison between 1993and 1999 then the available evidence indicates a dramatic and consistent worsening of

poverty in NWFP in both the rural and urban sectors. [Figure 2.1].

Figure 2.1: The Continuously Deteriorating NWFP Poverty Situation 1993 to 1999

Characteristics of Poverty

Several Characteristics of poverty in NWFP based on the available research are listed below:

NWFP faces difficult challenges due to its geography, history and location

NWFP is the poorest Province of Pakistan NWFP has poor social indicators and highest gender disparity Gender gaps are significant for all socio-economic indicators in NWFP Gender gaps tend to be wider in rural areas than in urban areas of NWFP. Gender gaps in NWFP are found to be larger than for the country as a whole

26.629.3

26.3

32.2

35.538.1

41.2 42.6

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

FY93 FY94 FY97 FY99

Pakistan NW FP


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Land ownership in rural NWFP is less concentrated than for the rest of the country,and there is prevalence of small landholdings, low agriculture productivity and highrural poverty

A large proportion of the paid employees in the urban sector of NWFP are engaged aswage labor in the informal sector, which is a significant employer in urban areas.

The poor have relatively low access to safe drinking water and sanitation facilities Availability of safe drinking water and sanitation facilities is characterized by large

rural-urban gaps in NWFP.

In terms of access to safe water and drainage in NWFP both urban and rural sectorsalike fare significantly worse than the country as a whole

NWFP has a limited resource base Provinces own revenues are low and its fiscal position has deteriorated during 1990s Provinces financial management has remained weak Much of provinces economic potential is still unexploited while this is at present a

major weakness it also offers a major opportunity in the future.

Correlates of Poverty

Several correlates of household characteristics and income poverty can be establishedfrom the available research for the NWFP:

The poor are more likely to live in larger households Poverty is associated with lack of asset ownership . The average size of agricultural

land owned by poor households is 0.25 hectares in rural NWFP, compared to 0.71hectares for the non-poor

Rural poverty headcount falls as the size of land holdings increases Small and marginal landholders are almost equally poor as those who own no land, Poverty among large landowners is significantly lower Poverty, is strongly associated with lack of human capital, measured by the

education and literacy status of the head of the household

In urban NWFP, employment of the household head does not show clear patternswith poverty status, partly due to the lack of detailed employment data.

However, a much larger proportion of households in the bottom quintile ofexpenditure have the head of the household working as paid employees, as

compared to the urban population as a whole. In rural NWFP, the poor households are relatively more likely to be headed by

individuals working as a paid employee

These correlations along with the characteristics of poverty listed above provide theindicative framework for the effective targeting of scarce resources within the povertyreduction strategy for NWFP.


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The Multiple Indicator Cluster Survey

Geographic targeting provides a method for improving the efficiency of resource use for

poverty reduction. Resources can be assigned on the basis of district ranking. In order tocollect information on key social and economic indicators at district level, thegovernment of NWFP, through the Planning and Development Department (P&DD) andsupport from UNICEF conducted a household survey (Multiple Indicators Cluster SurveyMICS) from September to December 2001. A total of 13,076 households drawn from 873

primary sampling units of which 223 were urban and 650 rural were interviewed. Thissurvey is the first attempt to get district-level representative estimates in the NWFP. Thissurvey collected data on wide range of indicators concerning children and women.Indicators comprise income, infant and under-five child mortality, under nutrition,education, adult literacy, water and sanitation, ante-natal and birth care, birth registration,feeding patterns, young child recent illness and cost of treatment, and use of

contraceptives and awareness of HIV/AIDS. The aims of this survey were: To establishes a credible baseline for monitoring socioeconomic status of districts atthe start of the new decade and devolution process

To develop ranking of districts to highlight the inter-district disparities in social andeconomic indicators so as to be able to address these through appropriate districtlevel social sector planning efforts by the provincial government.

To provide information on the situation of children and women, as well as child-focused benchmarking for measuring progress in post devolution era and forreporting on the World Summit Goals for Children.

Rectify data gaps in information systems from national surveys and sectoraldatabases; and address gender disparities and lack of uniformity in resourcedistribution among districts.

Building capacity of relevant government institutions, especially the provincialBureau of Statistics, through their active involvement in all the phases of thesurvey.

Based on the data of this survey, Table 2.2 below presents ranking of districts based onsix key indicators: infant mortality, primary school enrolment, adult literacy, water andsanitation and income per day per capita. The results from MICS show that there isconsiderable variation within the province in terms of poverty and social indicators.Districts of Kohistan, Upper Dir, Bunner, Batagram, Shanga and Tank are among the

poorest six districts in NWFP, and ranking extremely low in terms of social indicators.

The composite rank is the weighted sum of all ranks for these six indicators. Thecomposite rank indicates that Haripur is the least deprived district while Kohistan is themost deprived district of NWFP. Looking at other indicators, this table shows thatKohistan ranked lowest for 5 out of the six indicators. Haripur remained on top for infantmortality while for safe water it ranked 14. Bannu was observed to be number 1 for theuse of safe water. However, for all the othert indicators it is amongst the most deprived.


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For enrolment and literacy, Abbotabad was the top ranked district. Peshawar rankednumber 1 and Shangla ranked lowest in terms of urban population.

At the research level there are two major issues that require immediate attention fordevising an effective poverty reduction strategy. The low agricultural productivity in

NWFP combined with the smaller landholding size and the lower inequality oflandholding needs to be examined in depth. Such an analysis should also seek to identifythe key constraints to rural incomes and productivity in the province whether the issueof access to land is of crucial importance, or whether other factors, like lack of access to

factors like infrastructure including irrigation and credit , play equally critical roles.

Also at present the relatively high availability of health and education facilities in the NWFP does not appear to translate into commensurate outcomes in health and education. NWFP tends to lag behind the rest of the country in these outcomes. While the higher(relative to the country) rural male primary enrollment rate in NWFP is consistent withthe almost universal availability of male primary education, female primary enrollment in

NWFP la g behind rural Pakistan, in spite of the far higher incidence of girls schools inthe province.

Table 2.2: NWFP- Summary results of districts by RankingsDistrict Combined

rankInfant

mortalityEnrolled

in primary

school

Adultliteracy

15+

Use ofsafe

water

Adequatetoilet

Averageincome

per day per capita

Urban pop

Haripur 1 1 2 2 14 2 3 12Abbotabad 2 6 1 1 12 4 4 7Malakand 3 2 3 7 4 8 8 15Kohat 4 7 6 3 10 5 1 2Mansehra 5 5 4 5 17 14 7 19

Peshawar 6 4 13 6 3 3 12 1 Nowshehra 7 8 7 10 7 6 11 3Mardan 8 12 5 11 6 13 9 5Karak 9 3 14 4 11 19 15 17Chitral 10 11 6 8 15 1 18 13Hangu 11 10 16 14 16 9 5 4Swabi 12 18 9 13 8 12 10 8Bunner 13 9 20 22 19 18 2 22Lower Dir 14 15 10 17 21 22 6 18Swat 15 21 11 9 9 7 17 11D I Khan 16 17 17 19 2 10 13 10Charsadda 17 13 15 16 18 20 14 6Bannu 18 16 19 12 1 16 20 16

LakkiMarwat 19 14 21 15 5 15 22 14

Tank 20 20 18 18 13 17 21 9Batgram 21 23 12 21 20 21 16 21Upper Dir 22 19 22 23 23 23 19 20Shangla 23 22 23 20 22 11 24 24Kohistan 24 24 24 24 24 24 23 23Source: District-based Multiple Indicators Cluster Survey (2001)


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This apparent puzzle may be explained by a number of factors. Social and culturalmores, particularly as they relate to demand for girls education or use of health servi cesfor females, may play a role; lack of income or wealth may also depress demand foreducation. 2 Equally important is the fact that the figures listed above are but imperfectmeasures of access. Firstly, the mere presence of a facility is not enough to guarantee

quality, or even that the facility is functional. Quality problems in education and health facilities, according to a number of studies, are rampant in Pakistan, and the conditions in NWFP are similar which can be ascertained only after careful study. Secondly, thesemeasures do not account for the exclusion of social groups, which are also likely to havehigh concentration of poverty, from services and facilities. Both these problems cansignificantly reduce the effectiveness of services for the poor and disadvantaged groups,thereby affecting their potential to develop skills and enhance future economicopportunities. Females are a largely disadvantaged group in the NWFP. There is a largegender gap in the NWFP in terms of both the level and access to opportunity,empowerment and security considered essential for reducing poverty.

Focusing on the Large Gender GapThe gender gap can be monitored through the present level of indicators in NWFP forfemales versus males. A selected number of indicators has been presented in thefollowing table. Ideally, the Female/Male ratio should be 100% and the Male-Female gapshould be zero. In general, the lower the Female/Male ratio or the larger the Male-Femalenumber, the wider is the gender gap. When the Female/Male and Male-Female indicatorsobtain values of greater than 100% and negative, respectively, then the incidence amongfemale population is higher than male population. From the table below it can beobserved that the number of underweight female children is higher than the number ofunderweight male children. This category applies to under-five children. Again, this is agender gap in favour of the male under-five population. All the indicators noted below

point to the fact that the female population has greater barriers to physical and mentaldevelopment than the male population. Thus, focusing on strategies to address this issue

becomes urgent in NWFP.

Table 2.2: NWFP Gender Gap in Key IndicatorsIndicator Female/Male Male - Female

Adult Literacy rate (15 years +) 36.7% 36.4% Net primary school enrolment 72.7% 12%Immunization (BCG scar)* 94.0% 4.2%Children reaching grade 5 98.5% 1%Underweight (-2SD) under 5 years of age 108.0% -3% (negative 3%)

Source: NWFP, A District -based Multiple Indicators Cluser Survey, 2001; GoNWFP, PDD, May2002.*Data analyzed and presented from original data set by UNICEF; disaggregated data not present inthe MICS report.

Considering the district data from the MICS report, Kohistan district has the widest net primary school enrolment gap (Female/Male = 48%; Male Female = 11%) and

2 Regression analyses have shown households economic status to be an important determinant of school participation,for entire Pakistan and individual provinces alike.


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Abbotabad has the lowest gap (Female/Male = 96%; Male Female = 3%). Consideringadult literacy rates, Kohistan district has the widest gap (Female/Male = 10.2%; Male Female = 21.4%) and Abbotabad has the lowest gap (Female/Male = 57.7%; Male Female = 33.1%).

When adult literacy rates are compared to net primary school enrolment, the improvingsituation of gender gap can be observed. Therefore, it can be forecasted that the adultliteracy gap will be closed as time passes. When implementing the strategies addressed toeducation and adult literacy, this fact will be taken into consideration.

At the same time, the large variation in the gender gap between Kohistan district andAbbotabad indicates that further district level analysis on strategies should be undertakenat the time of implementation. Obviously, in areas or districts where gender disparityrepresented by Female/Male ration is 50% lower (a 50% ratio indicates there are twice asmany males than females in this category) accelerated strategies for closing the gapshould be followed. The adult literacy gender ratio of 10.2% quoted above indicates that

there are 10 times more literate men than women.The Poverty Reduction Strategy therefore attempts to address the quality and governanceaspects, to improve service delivery of education and health with a special focus onreducing the gender disparities.


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CHAPTER 3. PRSP DIALOGUE

In preparing the Poverty Reduction Plan during 2000-2001 the government of NWFPheld extensive consultations with NGOs, donors and other stakeholders. However, the

NWFP Government did not discuss and/or disseminate the PRP program to the newDistrict Nazims, Councilors, and district officials. It was waiting for them to settle intotheir new roles.

This process of consultation at the local level was finally initiated in December 2002when SWOT (Strengths Weaknesses, Opportunities and Threats] analysis was initiated attwo levels. Templates and instructions were issued to all DCOs to involve the devolvedelected local Government and elected officials and other stake-holders in the consultative

process. Discussions were also initiated with all the heads of sections within the Planningand Development Department of the Government of the NWFP and the Chief PlanningOfficers of the key departments in order for them to initiate discussions at the sectoral

levels with all key stake-holders. The intention was to initiate dialogue with the newdistrict governments and all levels of civil society to ensure that the detailed sectoralstrategies and investment programs contained in the PRSP fully reflect the districtgovernment priorities. This was extremely essential to engender ownership of the reformobjectives.

As part of this initiation program presentations on the determinants and dynamics of poverty in NWFP and the key elements of the Poverty Reduction Plan were presented tothe Section Chiefs of the P&D Department and the Chief Planning officers of the lineministries and to all the DCOs and elected Nazims and other officials of the localGovernments who were invited to Peshawar for discussion in mid January 2003.

The response was significant. All the participants welcomed the process and stressed theneed to define their own strategies of poverty reduction based on their own perceptions of

poverty. Based on this response there is even more reason for the consultative process to be made an ongoing process for monitoring and evaluation and be given the highest priority to ensure effective ownership and sustainability of the poverty reduction strategy.

Detailed guidance notes as well as an instrument based on the SWOT (strengths,weaknesses, opportunities, threats) framework was also circulated to every DCO in the

province requesting that consultative workshops for stakeholders be organized in eachdistrict. The objective was to bring stakeholders from all segments of civil society into

the PRSP formulation discussions in order to determine the strengths, weaknesses,opportunities and threats facing the districts as well as to suggest key interventions toincrease opportunity, security and empowerment of the people. These latter three aspectsare based on international experience, considered to be essential for any effective povertyreduction strategy.

The DCO led consultations with the elected officials and the representatives of civilsociety were held in every district. And following the meeting held in Peshawar to which


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all the DCOs in the Province as well as the District Nazims were invited it was decided toconduct a series of larger stakeholder consultations in the selected districts to befacilitated by the PRSP consultant and his team of experts. These consultative workshopswere held in five districts namely, Peshawar, Mardan, Swabi, Dir and Mansehra duringFebruary 2003.

Earlier in January 2003, a meeting was also held in Peshawar with the Federal Secretary,Economic Affairs Division coordinated by the Additional Chief Secretary Development.The Federal Coordinator of the PRSP Program also attended. All the ProvincialSecretaries of the key line departments in the province attended. This meeting providedthe general direction and agreement on the salient features of the PRSP

The completed SWOT instruments from the consultations in all the Districts as well asthe results from the five extended workshops in the selected districts were analyzed andintegrated into the PRSP.

The main results of the assessment of the Strengths weaknesses opportunities and threatsfrom these consultations are summarized below:

The main strengths listed by the stakeholders during the consultative workshopsincluded: Innovative and hardworking manpower Rich Mineral resources Abundant Hydel resources Fertile land; and Horticulture including fruits vegetables and rare medicinal herbs and livestock.

The main opportunities were seen in the areas of: horticulture and vegetable production and value-added processing mineral and natural resource exploitation and processing within the province the use of the hydel resources as a source of power for small and medium scale

industry and for small scale power generation dairy and livestock development tourism and the opportunities arising out of the Afghan reconstruction.

The main weaknesses that came up in the discussions included: extreme poverty Inadequate resources given size of poverty problem high population growth pressure of Afghan refugees high population pressure on good agricultural land high population pressure development and social sector resources Great geographic and development diversity across regions both with and across

districts Poor exploitation of natural resources including wate


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Low quality and coverage of infrastructure Poor quality drinking water in a number of districts and urban areas

The threats were seen to come mainly from: poor governance

poor understanding of the rights and responsibilities under the Devolution Plan Inadequate functioning of the local government system lack of effective district to province and province to center coordination high refugee population drought

These SWOTS formed the basis of the interventions suggested by the consultative process. These are discussed at the end of the next section. It is expected that this processof consultation will continue over time and that regular two-way flow of informationfrom the provincial P&D Department to the districts and from the districts back to theP&D Departments will take place on a continuous basis. Such a two-way flow ofinformation is absolutely essential for the monitoring and evaluation of the overall

poverty reduction strategy.


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CHAPTER 4. THE POVERTY REDUCTION SRATEGY (PRS)

Background

The Government started to address the multiple social and economic problems during2000, with varying degrees of success. Recognizing that many of the problems wereinterdependent and needed a more systematic approach, the Government of the NWFPdecided to develop a comprehensive reform program for the province. For this purpose, it

prepared a strategy document, the Provincial Reform Program (PRP) 2001-2004 , whichwas discussed extensively with various agencies, including the World Bank. The

proposed program was approved by the NWFP Cabinet in June 2001. Several of the PRPreform measures were incorporated in the FY02 Budget and reflected in the BudgetWhite Paper and other documents. NWFP was the first province to embark on such acomprehensive reform program. That on going PRP forms the core of the Provincial

PRSP. Moreover the Government of NWFP has committed to a structural adjustment program to bolster this medium term plan. Elements of the Structural AdjustmentProgram are presented in Annex II. This lists the actions taken so far as well as those

planned over the medium term 2003-2005 for each one of the key poverty reducinginterventions.

With the coming into power of an elected Government in 2002 it was imperative that thatthe commitments made for the medium term i.e. 2003-2005 be ratified as quickly as

possible. No strategy can be effective without political commitment. On April 5, 2003 thePRSP for the NWFP was presented before the Senior Minister and the Health Minister aswell as the Secretaries of the key line Ministries. What is presented below has the

approval of the Senior Minister and is based on the assumption that the politicalconsensus exists to carry forward the commitments made in the past two years. In allstrategic planning of an economic nature the crucial assumption is cetirus paribus i.e. allother things being equal.

The overarching objective of the Poverty Reduction Strategy Paper for the NWFP is torestore good governance and the respect for the rule of law, enhance the effectiveness of

public expenditures, re-establish the integrity of state institutions and their accountabilityto the public. These objectives are in line with the goals of the I-PRSP for Pakistan [seeAnnex III]. The PRSP for the NWFP has the following five main pillars withstrengthening governance to improve public service delivery as the cross cutting theme:

1. Governance reforms to achieve an efficient, accountable, and service oriented civilservice;

2. Reforms to improve service delivery in key sectors (especially basic health,education and social services);

3. Fiscal and financial management reforms to improve governance in budget andfinancial management, adopt a medium term budget framework (MTBF), enhance


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effectiveness and accountability of expenditures, and strengthen resourcemobilization; and

4. Promoting Sustainable growth.5. Addressing Vulnerability to Shocks

A prosperous and stable NWFP is geographically and economically critical to Pakistanswell being. In addition, there is a consensus among the policy makers and civil societythat a more literate and healthy population would enhance job opportunities within andoutside the province, and mitigate the risks for extremism. Recently, the Government ofPakistan, together with the governments of NWFP and Balochistan, has initiated

preparation of a federally funded development program to address the under developmentof the areas bordering Afghanistan. The majority of the populated border areas fall in

NWFP. These areas are amongst the poorest in NWFP, and the program is intended to provide resources for physical infrastructure, social services, and income generatingactivities. Moreover, the Federal and the NWFP government have also formulated a long-term program to mainstream the tribal areas politically, legally and constitutionally

with the rest of the country.

A) Strengthening Accountability and Professionalism of State Institutions

Decades of neglect and decay took their toll on governance in the province, as in the restof the country. The result has been excessive staff, poor compensation (especially athigher levels), declining quality of civil servants, over-centralization of decision-making,complaints of widespread corruption and malfeasance, poor management systems, andcumbersome and costly procedures. These are complex issues that would take a long timeto address. The Government of NWFP has therefore drawn up a phased and realistic

program to achieve its objectives in this area.

Devolution and Civil service Reforms

Objectives and Str ategy. The objectives of the devolution and civil service reforms areto increase the efficiency of government operations, make them more accountable tousers, effective in delivering public services, and raise the level of competence andintegrity of government officials. Government strategy to achieve these objectives is tofully implement the devolution of power, decentralize functions and operations, reducestaff at the provincial level, tighten the system of accountability, reorganize functions anddepartments at the provincial level, improve recruitment and make promotions more

performance based, simplify procedures, and computerize business process.

Recent Reforms. The restructuring and rightsizing of provincial government, includingadministrative and operational aspects of the Devolution, have been largely completed.In regards to devolution, the required staff (around 200,000 out of total 280,000

provincial employees) has been assigned to district governments 3; and district budgeting

3 Eventually most of these staff would become district government employees. For now they are provincialemployees, but their postings and performance evaluation is now down by district governments.


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and most other non-policy functions have been transferred to the districts. The districtRules of Business have been prepared, training of elected representatives and staff has

been instituted, local government contract rules have been notified, and district accountshave been established. In regards to rightsizing, the Government of NWFP hasrestructured 26 provincial departments, merging several departments, closing

autonomous bodies and several specialized agencies, thus streamlining and downsizingthe departmental structure and refocusing it according to new functions. Consequently onthe basis of identified redundancies, over 6,000 employees have been placed in a surplus

pool, many of whom have been assigned to districts.

Recruitment, promotion, and transfer policies have been revised and the key institutionmanaging them strengthened. The provincial Public Service Commission (PSC) has beenstrengthened and made more autonomous, through appropriate changes in its legislationand governments administrative and Financial Rules. The PSC has been made fullyresponsible for all recruitment of officials of officer grade. Institutional mechanisms have

been put in place to make recruitment and promotion merit- and performance-based. The

existing contract employment policy is being revised with a view to making all task- andlocation-specific positions subject to contract employment. The Government iscontinuing its freeze on new hiring, except for social sector delivery staff such asteachers; and the compulsory retirement rules have been amended to facilitate retiring ofredundant or incompetent officials.

Far reaching Judicial Reforms have been initiated. The judicial and executive functionshave been legally separated. The judiciary has been made autonomous in matters ofrecruitment of judicial officials and financial aspects, which is a significant step inenhancing the independence of the judiciary.

Several institutional reforms and capacity building programs have been initiated. Theseinclude: (i) the Essential Institutional Reform Operationalization Project (EIROP) funded

by UNDP, SDC and GTZ, was initiated in March 2001 to assist with human resource(HR) and institutional reform and support capacity building and training at the districtlevel. The EIROP will be implemented over three years; (ii) with DFID support, atraining program for the new elected representatives and officials has been launched atdistrict and lower levels. In phase I, all union councilors were trained. A special programof training women councilors is planned shortly. The government has started training ofdistrict government functionaries in Financial Management, Budgeting, and DevelopmentPlanning. It has also launched a program of IT training; and (iii) cognizant of the hugecapacity building needs, especially to implement the PRP and the expanded social sector

programs, the government has initiated a review of unmet capacity needs. It has alreadydecided to establish the Education and Health Sector Reforms Units, the Budget AnalysisUnit, and the overall Economic Reforms Unit. In addition, the government has approveda comprehensive three-year capacity building program to strengthen the managerial andtechnical capacity of provincial and district officials.

M edium-Term Reforms . Over the medium term, the Government plans to continue toimplement the reforms under way and further intensify them. Among the planned actions


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are: (i) implementing the expanded capacity building program; (ii) developing a HRdatabase using computerized payroll data and by conducting a civil servants census; (iii)reviewing and adjusting the restructuring, downsizing, and personnel managementmeasures; (iv) strengthening district government staffing and staff training; (v)completing district rules of business and codes; (vi) establishing courts for small causes

and family disputes; (vii) establishing public safety and accountabilitycommissions/offices at the provincial and district levels; (viii) appointing separate seniorofficials to handle public complaints against officials; and (ix) establishing a LocalGovernment Commission to oversee performance of district governments. The ongoingand planned reforms are expected to have a significant impact in terms of increasing theefficiency, effectiveness, and integrity of the civil service, as well as making it moreresponsive to peoples needs through devol ution and administrative decentralization.

Anti-Corruption Initiatives

The government has moved aggressively on anti -corr upti on by sending a clear signal

that no one is above the law, and taking steps to reduce corruption in the future. Anti-corruption rules have been simplified to make disciplinary actions easier to implement.Better enforcement has resulted in the initiation of 2240 disciplinary cases since 1999(compared to a similar number in the last decade), over half of which have been decided.In addition, it has dismissed or suspended about 300 education department employees(including teachers) for negligence and prolonged absence from duties.

B) Accelerating Human Development

Social Asset Creation:

Impoverished communities usually do not have access to basic social services. They needthe support of the government to be able to raise their children in a healthy and

productive environment. Todays children are parents to the next generation, thus, if theyare not properly supported through social assets such as health facilities and primaryschools, they become transmitters of poverty. In a vicious cycle, malnourished girls growup to become malnourished mothers who give birth to underweight babies, parentslacking access to crucial information are unable to optimally feed and care for theirchildren; and illiterate parents cannot support children in their learning process. Childrenare often hardest hit by poverty. It causes lifelong damage to their minds and bodies.They are therefore likely to pass poverty on to their children, perpetuation the poverty

cycle.The provincial government strategy with respect to social asset creation for the poorincludes support to establishment of primary schools, primary health facilities, safe water

points, communal latrines and capacity building of established entities that work with thecommunities, such as the Lady Health Workers (LHW). Special attention will be given tothe welfare and access of poor children within this strategy. Nutritional needs of the

population will be addressed within this strategy. One of the major strategies of the


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government is to break this cycle of poverty through creating social assets that isaccessible to the poorest of the poor, the vulnerable groups, women and children.

Investments in children today will help lay a solid foundation for sustained and equitableeconomic growth in the future. Attainment of sustained rapid economic growth is not

possible with high levels of illiteracy, malnutrition and morbidity. Therefore social assetcreation for the poor, economic and social reform go hand in hand in to ensure a strategythat will alleviate poverty for the population successfully and in a sustainable manner.

A major thrust of the Governments reform effort is to imp rove the delivery of humandevelopment services to turn around the current situation and have a lasting impact on

productivity, equity, poverty, and social support system. These efforts are in tandem andcomplementary to the financial and governance reforms that would have a positiveimpact on improved delivery of various government services, through increasedresources, efficiency, and responsiveness of the system. The important reforms in thedelivery of social services and delivery of community infrastructure services are

discussed below.Education

The education indicators in the province are still relatively low, the main reasons forwhich are: inadequate financial resources; physical inaccessibility of many areas; poorlytrained and ill-paid teachers; general decay in educational standards in the country;inadequate supply of instructional materials in schools; poor physical facilities in schools;weak accountability, institutional capacity and management of the educational system;and lack of community involvement in school affairs.

Objectives and Strategy . The Provincial Reform Program has made educationalimprovement the foundation for achieving longer-term economic development and

poverty alleviation in the province. Education is the first priori ty, second priority andthird priority of the government according to the Government of NWFP. TheGovernments medium -term objectives in the sector are to:

(i) improve primary education (both enrollment and quality ofinstruction);

(ii) reduce gender and rural-urban disparities; and(iii) expand the capacity at the secondary school level.

These objectives will be achieved by increasing resource allocation to the sector,allocating more resources to female education, upgrading the quality of instruction andteacher training, improving the management structure, implementing devolution, andincreasing community and private sector involvement. In May 2002, the governmentapproved a comprehensive medium-term reform program, which builds upon andstrengthens the reform program developed in 2001 under the PRP and reflects higher

budgetary allocations included in the MTBF for FY03-05.


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Recent Reforms. The highest priority is being given to improving quality and access bytaking the following measures :

Approving a comprehensive province-wide staff and facility rationalization plan whichwould serve as a basis for needs-based recruitment, rationalization of facilities to reduce

inefficiencies, and redeployment to ensure every primary school meets the targetedteacher student ratio of 1:30. As part of this rationalization plan, recruitment for 2,100additional teachers has been approved for immediate deployment to schools withoutadequate teachers; addressing teacher absenteeism by deploying teachers to their homedistricts and facility-specific contract recruitment; introducing a results-based teacherevaluation and reward system and initiating a province-wide periodic student assessmentsystem as part of the National Education Assessment System (NEAS), which would befully funded in the FY03 budget.

Strengthening of teacher training programs ; The institutional and management reformscomprising bifurcation of the provincial education department into lower and higher level

education; Creating separate teaching and management cadres, the latter is meant toestablish a professional school managerial cadre; Introducing computer literacy andEnglish-medium instruction on a pilot basis; Introducing textbook deregulation forClasses 9-12, and developing a road map for expanding this initiative to the primarysector, to allow for more efficient and competitive printing and publishing of textbooks.Establishing clear criteria for the establishment/construction of primary schools and upgradation of schools, in order to strengthen transparency of decision making and ensurethat decisions are in line with sector goals; and Establishing an Education Sector reformUnit and staffing it to monitor and oversee progress in implementation of reforms.

Public-private partnerships and community involvement is being encouraged through:Initiating a program to encourage private sector to use unoccupied government buildingsfor establishing schools; restructuring the Frontier Education Foundation which supports

NGOs providing education, to make it autonomous and expand its activities to promote public-private partnership with adequate linkages with the Departments of Education;strengthening parent-teacher associations (PTAs) in almost all 20,000 primary schools;and providing funds for instructional materials and minor repair (IM&R) to individualschools through the PTAs.

The monitoring and supervisory mechanisms have been strengthened. Circle Teams have been designated to carry out field visits every two weeks to monitor absenteeism andavailability of inputs at the facility level based on the new monitoring forms. The reportsare reviewed monthly at the district level, and will now be reviewed quarterly by theEducation Minister. The government views these steps as supplementing thecitizen/community oversight and accountability arrangements built into the devolution

plan. These are viewed as the only sustainable and effective way to monitor agency performance. In addition, the Education Management Information System (EMIS) would be fully funded in the regular budget, starting in FY03.


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Steps have been taken to reduce gender disparity . The FY02 budget allocated 70% of thesectors development budget to girls schools, and innovative incentive schemes are

being developed to increase girls; enrollment. A major primary school facilityupgradation program is being initiated to ensure that essential missing physical facilities(such as toilets, boundary walls, electricity) are provided to 100% of girls schools by end-

FY03.

The allocation for education has been increased significantly. Expenditures on educationhave increased by 27% from Rs. 6.9 billion in FY 99 to Rs. 8.8 billion in FY01.Expenditures have been reallocated toward primary and secondary education andvocational training (including teacher training and away from tertiary and universityeducation. User charges from higher education, which have historically been very low,were increased by around 20% in FY01.

M edium-Term Reforms . Over the medium term, the Government plans to take thefollowing actions:

Increase allocations by over 73% from Rs. 8.5 billion in FY02 to Rs. 14.7 billion inFY05, including increasing instructional materials and minor repair allocationsseveral folds;

Complete the management reforms to implement the process of district-basedmanagement, separation of teaching ad management staff, and training of staff;

Complete the teacher redeployment, and facility rationalization based on theapproved staff and facility rationalization plan;

Expand school capacity in partnership with the private sector and communities andcontinue the strengthening of PTAs;

Provide essential physical facilities in all primary schools, especially for girls, andcontinue the policy of larger allocation of development funds for girls schools;

Deployment of teachers in home districts and location-based new recruitment, andin-service teacher training;

Consolidate performance-based teacher evaluation and compensation, and the province-wide student assessment system;

Continue textbook de-regulation; Expand secondary school capacity, PTAs for secondary schools, and school

facilities for computer literacy;

Establish primary schools in seriously deficient districts; Further increase in higher education user charges; and Continue to strengthen the monitoring and supervision system including the

commission of a regular third party user and facility survey in October 2002, andannually thereafter, for independent monitoring of, among others, service deliveryindicators.

The impact of these wide-ranging reforms is expected to be substantial. By the end ofFY05, the overall primary school enrolment is expected to increase by 15%, with girls


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enrolment increasing by 30%. 4 By the end of FY03, 100% of girls schools would have basic physical facilities (such as toilets an d boundary walls), and 100% of boys schoolswill achieve the target by end of FY05. Serious gaps in school capacity in remote areaswould have been remedied. The quality of teachers, instruction, and student achievementare also expected to be significantly higher by FY05.

Health

Underlying the low level of health indicators are inadequate and uneven availability of primary health facilities, poorly staffed and stocked clinics, unplanned expansion offacilities, inadequate allocations which are heavily skewed towards the tertiary healthcare, and high incidence of preventable diseases.

Objectives and Str ategy . The objective in the health sector is to significantly improvehealth indicators in the province over the medium term. The Governments strategy,

prepared in consultation with stakeholders, is to improve the management structure,

reorganized health facilities, with a multi-level referral system, focus on preventive and primary health care, remove obvious gaps in facilities, increase budgetary allocations aswell as user charges, and increase reliance on the private sector with adequate regulation.

Recent Reforms . The Health Care and Hospital System Management Reforms have beeninitiated. The Department of Health has been restructured in line with the Devolutioninitiative with a substantive shift of staff and resources to the districts. A managementcadre has been created, and the separate male/female cadres of doctors have beenmerged. A Health Sector Reform unit has been established to strengthen capacity for

planning and monitoring the reform process. Plans are being formulated, on a district basis, to rationalize health service delivery and facilities aimed at developing a gradedand referral based system with appropriate staffing norms. A pilot is underimplementation in one district to rationalize facility and serve as the basis for widerreplication. Rationalization studies are underway in 13 other districts. All tertiaryhospitals have been given financial and administrative autonomy with the aim ofachieving financial self-sufficiency in three years, while plans are being developed to

protect access of the poor through safety nets. A hospital management system is beingdeveloped to improve cost effectiveness and efficiency of public hospitals. A three-year

program has been approved to engage more female nurses to meet acute shortages at thedistrict and sub-district hospitals. And finally, facility-specific contracts have beenintroduced to reduce absenteeism.

Communicable Disease Control and Maternal Health Programs have been strengthened.A program to expand the coverage of immunization under the Global Alliance forVaccination Initiative (GAVI) has been approved. This expanded program includessupport for activities such as monitoring, staff development, and cold chain improvementwhich are all expected to improve coverage of immunization. The Hepatitis Bvaccination has been initiated in three districts and province-wide coverage will being in

4 Traditionally, the government has tracked gross enrollment rates. With the introduction of MICS andstrengthening of EMIS, NWFP will start tracking net enrollment rates from FY04.


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FY03. A provincial task force, chaired by the Governor, for polio elimination has beenoverseeing an aggressive campaign against polio. Polio cases have been reduced from 57in FY00 to 28 in FY01. An intensive campaign for TT immunization of pregnant womenin 15 high risk areas, with involvement of Lady Health Workers (LHWs), was initiated inAugust 2001. A plan to recruit1800 additional LHWs has been approved, and their role

and that of paramedics is being expanded to include nutritional and reproductive healtheducation. Finally, the TB DOTS program has been revitalized in 5 districts covering 20 percent of the population.

Allocations for health sector have also been increased More emphasis has been given toexpenditures on primary health care and mother and child care where the expenditureshave increased by 8% compared to a 2% overall increase in health expenditures duringthe MTBF period.

M edium-Term Reforms . As health sector reforms have been initiated in all the importantareas, the emphasis in the medium term will be on consolidation and strengthening. In

particular, the Government plans to focus on the following activities: Strengthening the Reform Unit, capacity and training of the district staff, and thehospital management system;

Reviewing the experience of the pilot project for a graded referral system andreplicate it in other districts;

Expanding the use of LHWs and paramedics as the frontline health workers andcontinue location-specific recruitment/deployment of health workers;

Augmenting public health services in partnership with the private sector and localcommunities;

Implementing phased increases in user charges and putting in place an effectivesafety net for the poor;

Expanding the coverage of communicable disease control programs ofimmunization, TB DOTS, and of reproductive health services;

Increasing total expenditure by 120% to Rs. 4.3 billion in FY 05, with higherallocation for primary care; and

Monitoring the impact of reforms through periodic MICS and third party surveys.

Women Development

Progress in this area has been going on for many years. Women are increasingly

receiving education, participating in many professions and businesses, and playing anactive role in politics. However, as shown in the Gender Gap Analysis (Annex ll), theGovernment realizes that it has to sharpen and strengthen its focus on this importantdevelopment issue to fully utilize its human resources.

Girls and women constitute a large portion of the population in NWFP. A comparison ofsocial indicators shows that girls and women lag behind boys and men in terms of


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survival, development, protection and participation. Contrary to international trends,there are fewer females than males in Pakistan. Less girls than boys get enrolled inschools, as can be seen in the Gender Gap Analysis. Girls and women are also more atrisk of violence and exploitation. Families often take the decision of restricting mobilityof girls and women to protect them from external threats of violence and abuse, thus

depriving them of equal opportunities for development.

As a result of reduced opportunities, girls and women are unable to develop their full potential thus limiting their ability to contribute fully to the development of the familyand the community. It also places a heavy responsibility on boys and men, who oftenhave to support large families of 8-10 persons on a single income. Translated at the

provincial level, the inadequate human development and protection of girls and womendeprives the province of huge economic and development potential. Without addressingthe issues of gender-based biases and discriminations against girls and women, povertyreduction strategies would not have the desired impact in the province.

Government of Pakistan acceded to the Convention on Elimination of DiscriminationAgainst Women (CEDAW) in 1996, thus indicating its commitment to provide equalopportunities for development and elimination of discriminations against girls andwomen at all levels, including various government and social levels. The Government ofPakistan has also prepared a National Plan of Action, which outlines plans for key areasof development for girls and women, which include health, education, economicempowerment, political participation and protection from violence and exploitation. The

plans addresses the issues of development of girls and women in different spheres of life.It proposes selected strategic interventions aimed at providing equal and equitable humandevelopment opportunities and protection from violence and abuse for girls and women.

Future Strategy:

The provincial government will implement numerous strategies in this regard, whichinclude: promoting the participation of women in decision making processes; policychange to facilitate female participation; capacity building and skill development;

partnership with community, NGO and private sector; gender disparity reduction;ensuring access to gender disaggregated data; and provision of improved access to socialservices for the female population.

In line with this strategic approach, key interventions proposed include a focus on thefollowing:

Review and bring about required changes in legislative framework and policies to enddiscriminations and gender biases with a focus on education, health, finance, assetownership, labour and protection from violence;

Promote participation of women in decision making processes at all levels includingin the political processes;

Build the capacity of women in decision making positions to enable them to fulfilltheir responsibilities;


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Raise awareness on equal rights of girls and women for survival, development, protection and participation from policy to household level, with a focus on boys andmen;

Develop capacity of women for improved participation, financial and landmanagement as well as entrepreneurial skills;

Ensure equal access to services for girls and women including in the areas of health,education, skills training and credit; Ensuring that routine monitoring systems used for data generation, surveys and

evaluations will provide gender disaggregated quantitative and qualitativeinformation;

Ensure that the planning process does utilize gender disaggregated data to amelioratethe situation of the female population;

Develop capacity of service providers for ending gender-biases in planning andaccess to services and gender-based violence and exploitation;

Remove barriers of age, domicile, female discrimination as an affirmative action tohelp reduce the gender gap in employment;

Document, monitor and address gender-based biases and violence against women.

Specifically, in each of the sectoral reform areas, especially in the crucial educationsector, concerted efforts are being made to reduce gender disparity. Also access tomaternal and family planning services is being increased. The Department of WomenDevelopment has under implementation several schemes, partly with support from the

private sector and local communities, to promote skill development among women and provide temporary shelter, a crisis center, and free legal assistance for women in distress.The Government plans to expand these activities through public-private partnership,community help, and NGOs assistance.

A Provincial Steering Committee, including civil society members, would oversee theseactivities, and provide a vehicle to raise peoples awareness of the needs and rights ofwomen.

Children constitute majority of Pakistans population. The proportion of the populationaged less than 15 years is higher in NWFP than the national average. Government ofPakistan is committed to welfare and development of this large cohort. Child rights arerecognized through the Convention on the Rights of the Child (CRC) to which Pakistan isa signatory. Recently, in the UN Special Session on Children, 2002, Pakistan alongwiththe rest of the world, agreed to make policies and take actions for meeting goals and

objectives set at the Special Session. These commitments are contained in the outcomedocument entitled A World fit for Children. As a follow up, Pakistan is preparing a

National Plan of Action [NPA] for Children. Similar planning initiatives are going on in provinces and Provincial Plans of Action [PPA] for Children are under preparation. Thisdocument is set to lead action for child rights and child welfare in the next 10 to 15 years.It is recommended that the strategies under the Provincial Plan of Action (PPA) under

preparation be given priority in the overall poverty reduction strategy of the NWFP.


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There are elaborate national and provincial plans to provide education and health tochildren. However in crucial areas such protection from violence and child labour plansare still being developed. Plan of Action for Children for NWFP would therefore serve tofill these crucial gaps in the social sector policies relating to children in a holistic manner.

It is now accepted worldwide that there can be no sustainable development withoutgiving access to rights. Rights of the children are of special significance in this regard.The government has shown commitment by announcing plans to of adequately fundingthe Plan of Action for Children. While detailed indicators are included in the PPA, threeindicators on birth registration, juvenile justice and education of worst forms of childlabour are being included in the PRSP for creating sharp focus and linkages between the

policies of the government and its implementation methodology. The Plan of Action forChildren will provide the matrix for implementing the commitments contained in thePRSP.

Water Supply and Sanitation 5:

Only Sixty-three percent of NWFP population has access to safe drinking water, whichexcludes open dug wells. This figure stands at 89 and 59 per cent for urban and ruralaccess, respectively. Thirty-nine per cent of the population in NWFP have access toadequate sanitation. The urban rural access is 75 and 33 per cent respectively. Lack ofaccess to safe water, inadequate sanitation and poor hygiene practices are some of theunderlying causes of malnutrition, disease and death in children. The lack of access tosafe sanitation is one of the major reasons for prevalence of sicknesses such as diarrhea inchildren and adults. Ensuring access to safe water and adequate sanitation can have amajor impact on raising the long-term GDP levels of the province. The ranking of

provinces in with respect to adequate sanitation has been presented in table 2.1.

Under the devolution plan, rural water has been increasingly decentralized to the districtand sub-district level including the allocation of funds to the different social sectors.Provincial governments are now releasing block allocations to districts. The fundsearmarked for the sector are included in overall provincial budgets (e.g the Public Healthand Engineering Departments, Local Government).

Within the existing fiscal space there is a need to ensure that budgets for rural water andsanitation are earmarked within the block allocations to districts and included in theKhushal Pakistan Programme. Rural water and sanitation projects can also be fundedfrom the special funds allocated to each MNAs and MPAs.

It will be imperative to allocate funds for rural areas for water and sanitation astraditionally, the focus has been on large infrastructure urban projects with highOperation & Management costs and little community involvement, affecting thesustainability of these projects. Low cost solutions for rural water and sanitation have

proved effective and have been insitutionalised within the local government. With theredefinition of the roles and redistribution of functions of the local government, resources

5 All data quoted in this subsection are from NWFP MICS 2001


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and information on low cost technological options need to be provided at district and sub-district levels.

Strategies for ru ral water and sani tation: The following strategies will be followed forrural areas:

Policy shift focussing on low cost technology and sustainable models; Capacity building of district and sub-district functionaries vis--vis their new rolesand responsibilities;

Replication of successful low cost interventions with community involvement.

The devolution has provided an opportunity to address key institutional constraints,which have historically hindered the delivery of urban services, especially to the poor[see Annex IV]. Using this opportunity, Government of NWFP has: consolidated variousservice delivery agencies (Communications & Works and Public Health EngineeringDepartment) with fragmented and overlapping service provision mandates; transferredfunctions and organizations to the local governments (including the Urban Development

Authorities); and instituted special arrangements for the main urban center, the PeshawarCity District. A regulatory body will be established for the urban water sector at the provincial level. The Government of NWFP has nurtured an enabling environment for participatory development and has spearheaded Community Driven Developmentinitiatives throughout the province. The World Banks Community Infrastructure Projectin NWFP has been a success story to the extent that a follow-on operation is being

planned. The Province is also the first in the country to start the development of anintegrated and participatory strategic plan at a city district level, which is likely to

provide a model for a comprehensive development framework for the newly formeddistrict governments. The Government intends to examine the need for any furtherstreamlining of agencies in this sector, adopting a uniform policy for community

participation and responsibility, and upgrading the management and technical capabilityof the local government urban services institutions.

C) Improving Fiscal Sustainability and Restoring Financial Accountability .

Fiscal and Expenditure Reforms

Objectives and Strategy . To expand fiscal resources for meeting its growing developmentand service needs, the GOVERNMENT OF NWFP has adopted a comprehensivemedium-term fiscal strategy. This includes:

Increasing provincial revenues through further tax reform and accelerating usercharge increases and saving interest payments through better debt management; Divesting inessential activities; Implementing fiscal devolution; Improving budgetary process, financial management, procurement process and

transparency;

Strengthening the audit oversight arrangements; and


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Formulating a medium term budget framework.

The key medium term pillar of fiscal adjustment is expenditure management andincreasing non-tax revenues and user charges, given the low immediate potential for

enhancing taxes.

Recent Reforms . The Government has started implementing the above strategy and hasalready taken actions in key areas as discussed below:

Implementation of fiscal decentralization has begun at the provincial level. In anticipationof the devolution of powers, the province prepared the initial district budgets for FY02.Local governments are preparing their own budgets for FY03, and the needed staff has

been re-assigned to the districts. Starting in FY02, the province began allocating certaindevelopment funds across districts based on clear criteria, including population andindicators of social development and backwardness. NWFP is the first province to have

used a needs-based formula for budgetary transfers to the districts.

Revenue measures are being implemented to strengthen revenue mobilization. The taxreforms include reducing and restructuring provincial taxes; imposing of income-basedagricultural income tax to complement the provinces land -based tax (unlike the other

provinces the land tax in NWFP is applied to all landholdings without exemptions);outsourcing of collection of motor vehicle tax and harmonization of rates with other

provinces; and restructuring and expanding of the base of the Urban Property Tax from18 to 27 rating areas. Moreover, enhancement and rationalization of user charges has

been initiated, especially for economic and tertiary-level social services. Irrigation waterrates ( abiana) are being increased by 25% each year. Higher user charges for roads and

tertiary health and education services are also planned, beginning in FY03.

Expenditures have been reprioritized to improve composition and strengthen expendituremanagement. The development program was rationalized. Over the last two years, thenumber of ongoing projects has been reduced by two-thirds, from 1125 to 375 projects;as a re sult the throw

POVERTY REDUCTION STRATEGY PAPER ON NWFP(KPK)

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