Multi Donor Trust Fund For KP, FATA, & Balochistan
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1 Multi Donor Trust Fund For KP, FATA, & Balochistan Multi-Donor Trust Fund for Khyber Pakhtunkhwa, Federally-Administered Tribal Areas & Balochistan
2 OVERVIEW The overall objective of the MDTF is to support the implementation of a program of reconstruction and development aimed at recovering from the impact of the conflict and reducing the potential for renewed conflict, as well as flood recovery and rehabilitation. MDTF projects will be executed by the Governments of Pakistan, KP, FATA, and Balochistan. Since the first Steering Committee meeting of September 17, 2010, the MDTF Secretariat has engaged with the two provinces, the FATA secretariat and EAD to i) finalize the MDTF financed projects pipeline, ii) agree on the methodology for the allocations of the pledged fund among the two provinces and FATA and iii) facilitate discussions between the MDTF beneficiaries and the EAD for defining the MDTF financed projects approval process. In parallel Bank teams were mobilized for the preparation of three projects. As of today the preparation work under one project has been finalized and is waiting signature (Emergency Recovery Project for $35 million) while the preparation work under another two projects is still in progress (Economic Revitalization project for $20 million & Enterprise Rehabilitation and Revitalization Project for $ 25). It is expected that these projects will be committed, respectively, by end December and end January. FIRST STEERING COMMITTEE MEETING At its first meeting, the MDTF s Steering Committee (SC) approved the Financing Strategy presented by the MDTF Secretariat. The meeting was co-chaired by Mr. Sibtain Fazal Halim (Secretary, Economic Affairs Division) and Mr. Rachid Benmessaoud (Country Director, World Bank, Pakistan). The discussions during the meeting focused primarily on the objectives and the scope of the MDTF. The SC guidance focused primarily on ensuring speed in preparation and implementation of the projects; keeping the focus mainly on post crisis while also addressing the response to the recent floods; working with a results framework; seeking the most strategic uses of the MDTF as a funding mechanism, and ensuring adequate communications with the Steering Committee as well as with the beneficiaries.
3 ALLOCATION OF THE GRANT PROCEEDS The methodology applied to allocate the pledged funds between the two provinces and FATA was based on the assessment of the impact of the conflict in each region and the size affected population. This approach has been supported and endorsed by the EAD. Based on this methodology, FATA and KP will be receiving approximately 87% of the funds with Balochistan allocations being at about 13%. However these percentages are still being discussed with the provinces and FATA and may change slightly as agreements are being finalized. The agreement regarding the allocations of the MDTF between the two provinces and FATA is expected to be finalized by November 25, PROJECT PIPELINE AND SELECTION OF ACTIVITIES The strategic objectives of the PCNA are the primary point of reference in guiding the process of selecting the projects to be financed by the MDTF. The identification of the projects is being performed in coordination with the provincial governments, the FATA secretariat and the MDTF secretariat. KP and FATA authorities both provided lists of urgently needed activities which fell within the PCNA recommendations and MDTF objectives. However, given the limitations of the MDTF resources, a further process of prioritization was required. Following number of meetings between the KP provincial government, the FATA secretariat and the MDTF secretariat a final list has been reached. This list includes 7 projects to benefit and be implemented by KP and FATA authorities in addition to allocations for capacity building and technical assistance. Provincial official in Balochistan have reconfirmed their need for support to the education sector through additional building of schools as was tabled at the Steering Committee meeting. The allocation for Balochistan also includes funds for capacity building and technical assistance. In total eight projects plus a program of Technical Assistance (TA) and capacity building support constitute the projects pipeline. Out of these projects, three are in the preparation process or have been prepared.
4 APPROVAL PROCESS AND NOTIFICATION BY THE EAD The World Bank (IDA) requires that the Government of Pakistan (GOP) send official letters, issued by the EAD, requesting the projects to be financed through the agency. Having the projects implemented by the two provinces and FATA does create certain uncertainty in the process at the provincial as well as the federal levels. The MDTF projects being of emergency nature requires the GOP and the provinces to expedite the approval process and the issuance of the official request by the EAD to the IDA. The arrangements at the provincial levels and the communication mechanism with the EAD are still under discussion and certain waivers are expected to be issued to expedite this process. EAD, provincial governments of KP and Balochistan and the FATA secretariat all recognize that the regular approval process will not allow for rapid delivery of the projects and will have negative impact on MDTF progress and objectives. Therefore, discussions are currently underway to formalize obtaining waivers for and expedite the approval processes for MDTF funded projects. BRIEF DESCRIPTION OF THE THREE PROJECTS PREPARED OR UNDER PREPARATION TO BE FINANCED BY THE MDTF 1) MTDF Supporting Safety Nets in Areas Impacted by the Conflict (Emergency Recovery Project for $35 million): Cash transfers help stabilize incomes, smooth consumption and avert any reversal in human capital formation. After a crisis, affected families often face problems of cash-flow which result in an inability to meet their basic needs, such as nutritional intake and schooling. By providing direct income support, the MDTF will help prevent this from happening and allow families to continue to meet their basic needs. The project is the first to be financed through the MDTF and addresses one of the strategic objectives of the PCNA which is to build responsiveness and effectiveness of the State to restore citizen trust. The negotiations of the KP-FATA ERP have been completed. The speed at which such operation was prepared confirms the ability of the MDTF to respond promptly to the provinces and FATA needs. This project has been prepared based on the Government of Pakistan s request to allocate $35 Million from the MDTF to support the government, specifically the KP province and FATA, in their recovery efforts through:
5 (a) The establishment of a system to facilitate the local government to collect data to target assistance to vulnerable households; (b) Providing safety net support grants to poor and vulnerable households affected by the militancy crisis in the target areas; The MDTF funds make use of the project s structure and systems (including establishment of local resource centers, data collection and validation, monitoring and grievance handling) that have been put into place with IDA financing. The MDTF funds therefore, will be channeled directly to target households and will account for 100,000 households in total. The MDTF funds will be used for the first round of disbursement to beneficiaries in Buner, Shangla, Swat, Upper and Lower Dir in KP, as well as Bajaur and Mohmand in FATA, all being conflict affected areas. 2) MDTF supporting the Economic Revitalization of KP & FATA (with $20 million contribution): Small and Medium Enterprises (SME) and the private sector are playing a bigger role in the country s economic growth and are becoming an important element in the job creation process. Providing immediate livelihood opportunities in KP and FATA will also contribute to the process of stabilization. The proposed project aims to support the economic revitalization of KP and FATA through rehabilitation of the small and medium businesses affected by the crisis and floods; attracting and promoting investment; and developing long term growth opportunities for the private sector. The project addresses one of the strategic objectives of the PCNA, which is to stimulate employment and livelihood opportunities. The project includes three broad areas of support; and these are: 1) Small and Medium Enterprises (SME) Development through revitalizing and rehabilitating existing enterprises, 2) Investment Mobilization through Diaspora and Public Private Partnerships (PPPs); and 3) Investment and Regulatory Capacity Building. The project is expected to be appraised and approved by the end of the calendar year. 3) MDTF support for Micro Enterprises and the Urgent Community Needs (with $25 million contribution): The PCNA recommend actions towards improving employment opportunities and income generation for men and women in militancy affected areas of KP and FATA with an emphasis on gender and disadvantaged youth. This project to be financed through the MDTF also addresses one of the strategic objectives of the PCNA which is to build responsiveness and effectiveness of the State to restore citizen trust. KP and FATA face unique challenges in terms of physical terrain, economic infrastructure and social and political climate. The specific objectives of the Economic Rehabilitation, Revitalization and Capacity Building Program are to: (i) rehabilitate and revitalize micro enterprises affected
6 by the crisis, (ii) encourage investment in the private sector and PPPs and (iii) establish the long term institutional underpinnings for growth. The overall goal of the program is to create livelihood opportunities and sustainable jobs for the people of KP and FATA through targeting the communities directly. The Pakistan Poverty and Alleviation Fund (PPAF) will be the implementing entity under the project as it has in place the institutional structure and experience to deliver, rapidly, such activities to the communities. FINANCIAL POSITION OF THE MDTF REFLECTING THE STATUS OF CONTRIBUTIONS AND SIGNING OF AGREEMENTS As of November 22, 2010, the MDTF has received commitments in the amount of $138.4 million, while agreements in the amount of $131.9 million have been signed. Funds in the amount of $67 million have been transferred to the MDTF account managed by the World Bank. Nine donors have thus far signed administration agreements (AA) with the World Bank, thereby solidifying their contributions to the MDTF. Finland was the most recent donor to sign an AA, for Euro $3 million on November 15, More details on the status of contributions can be found in the table below. Status of Contributions Pledged Donor Amt (m) Currency USD Signed Paid in Australia 10.0 AUD Denmark 40.0 DKK European Union 15.0 EUR Finland 5.6 EUR Germany 8.0 EUR Italy 4.0 EUR Sweden 5.0 USD 5.0 Turkey 5.0 USD UK 30.0 GBP USA 25.0 USD Total
7 MDTF SECRETARIAT The MDTF Secretariat is now fully operational, with the Program Coordinator, Robert Bou Jaoude starting duty in Islamabad on Oct.22 nd, The MDTF Secretariat also comprises a Communications Focal Point, a Liaison Officer and a Program Assistant. CONTACTS For more information regarding the MDTF, please contact; Mr. Robert Bou Jaoude, Program Coordinator rboujaude@worldbank.org Mr. Zeeshan Suhail, Communication Focal point zsuhail@worldbank.org
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