Pakistan: Sindh Devolved Social Services Program

Home , Government of Pakistan, Government of Sindh

Completion Report

Project Number: 34337 Loan Number: 2047/2048 December 2008

CURRENCY EQUIVALENTS

Currency Unit – Pakistan rupee/s (Pre/PRs)

At Appraisal At Program Completion 13 November 2003 19 September 2008 PRe1.00 = $0.0174 $0.0129 $1.00 = PRs57.42 PRs77.70

ABBREVIATIONS

ADB – Asian Development Bank ADF – Asian Development Fund ASP – annual sector plan CBO – community-based organization DSP – Decentralization Support Program DSSP – Devolved Social Services Program EA – executing agency GRAP – gender reform action plan HMC – hospital management committee LGC – Local Government Commission LGO – local government ordinance LSU – local support unit MDG – Millennium Development Goal MOU – memorandum of understanding MTR – mid-term review NGO – nongovernment organization OCR – ordinary capital resources PCR – program completion report PFC – Provincial Finance Commission PHED – Public Health Engineering Department PLD – provincial line department PRSP – Poverty Reduction Strategy and Program PSU – program support unit SAC – structural adjustment credit SAP – Social Action Program SDR – Special Drawing Rights SDSSP – Sindh Devolved Social Services Program SMC – school management committee TA – Technical assistance TMA – Taluka/town municipal administration TPV – third-party validation USAID – United States Agency for International Development VDA – village development association WSS – water supply and sanitation

NOTES

(i) The fiscal year (FY) of the Government and its agencies ends on 30 June. FY before a calendar year denotes the year in which the fiscal year ends, e.g., FY2005 ends on 30 June 2005.

(ii) In this report, "$" refers to US dollars.

Vice President X. Zhao, Operations Group 1 Director General J. Miranda, Central and West Asia Department (CWRD) Country Director R. Stroem, Pakistan Resident Mission Sector Director R. Subramaniam, Governance, Finance and Trade Division, CWRD

Team leader M. Van der Auwera, Social Security Specialist, CWRD Team member F. Teves, Assistant Project Analyst, CWRD

CONTENTS

Page

BASIC DATA i MAP vii I. PROGRAM DESCRIPTION 1 II. EVALUATION OF DESIGN AND IMPLEMENTATION 1 A. Relevance of Design and Formulation 1 B. Program Outputs 2 C. Program Costs and Disbursement 8 D. Program Schedule 9 E. Implementation Arrangements 9 F. Conditions and Covenants 9 G. Related Technical Assistance 10 H. Consultant Recruitment and Procurement 10 I. Performance of Consultants, Contractors, and Suppliers 10 J. Performance of the Borrower and the Executing Agency 11 K. Performance of the Asian Development Bank 11 III. EVALUATION OF PERFORMANCE 11 A. Relevance 11 B. Effectiveness in Achieving Outcome 12 C. Efficiency in Achieving Outcome and Outputs 13 D. Preliminary Assessment of Sustainability 13 E. Environmental, Sociocultural and Other Impacts 14 IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 14 A. Overall Assessment 14 B. Lessons 15 C. Recommendations 16 APPENDIXES 1. Program Framework 17 2. Implementation Status of Policy Matrix under the Sindh Devolved Social Services 19 Program 3. Allocations of the Conditional Grants 25 4. Program Organization and Responsibilities: Organization Chart 29 5. Social Service Expenditures, Government of Sindh 30 6. Third Party Validation 31 7. Overall Assessment 32

BASIC DATA

A. Loan Identification

1. Country Pakistan

2. Loan Number 2047

3. Program Title Sindh Devolved Social Services Program

4. Borrower Islamic Republic of Pakistan

5. Executing Agencies Finance Department, Sindh provincial government,

Planning and Development Department, Sindh provincial government Sindh Secretariat, Karachi, Pakistan

6. Amount of Loan ¥11,968,550,000 (equivalent to $110 million) From ADB’s ordinary capital resources

7. Program Completion Report PCR: PAK 1091 Number

B. Loan Data

1. Appraisal 1 October 2003 – Date Started 17 October 2003 – Date Completed

2. Loan Negotiations 13 November 2003 – Date Started 15 November 2003 – Date Completed

12 December 2003 3. Date of Board Approval

17 February 2004 4. Date of Loan Agreement

5. Date of Loan Effectiveness

– In Loan Agreement 29 April 2004 – Actual none – Number of Extensions

6. Closing Date 1 February 2007 – In Loan Agreement 23 August 2007 – Actual none – Number of Extensions

7. Terms of Loan ADB’s London interbank offered rate (LIBOR)- – Interest Rate based lending facility

15 years – Maturity (number of years) 3 years – Grace Period (number of years)

9. Disbursements a. Dates Initial Disbursement Final Disbursement Time Interval

29 April 2004 23 August 2007 40 months

Effective Date Original Closing Date Time Interval

29 April 2004 1 August 2007 39 months

b. Amount (¥) Category or Last Net Amount Subloan Original Revised Amount Available Amount Undisbursed Allocation Allocation Canceled Disbursed Balance 01-Sindh Devolved 11,908,707,250 0 0 11,908,707,250 11,908,707,25 0 Social Services 0 Program 02-Front End Fee 59,842,750 0 0 59,842,750 59,842,750 0 Total (Loan 11,968,550,000 0 0 11,968,550,000 11,968,550,00 0 Currency) 0 Total (US $ 110,000,000 108,286,783 108,286,783 0 Equivalent)

C. Program Data

1. Program Cost ($)

Cost Appraisal Estimate Actual

Foreign Exchange Cost 110,000,000 107,726,746 Local Currency Cost 0 0 Total 110,000,000 107,726,746

2. Program Schedule (in ¥) Item Appraisal Estimate Actual First tranche release 7,289,935,000 Second tranche release 4,025,785,000 Third tranche release 592,987,250

3. Program Performance Report Ratings Ratings

Development Implementation Implementation Period Objectives Progress From 31 December 2003 to 30 December 2004 Satisfactory Satisfactory From 31 December 2004 to 30 December 2005 Satisfactory Satisfactory From 31 December 2005 to 30 December 2006 Satisfactory Satisfactory From 31 December 2006 to 30 August 2007 Satisfactory Satisfactory From 31 August 2007 to 31 December 2007 Satisfactory Partly Satisfactory

iii

D. Data on Asian Development Bank Missions No. of No. of Specialization Name of Mission Date Persons Person-Days of Membersa Loan Fact-findingb 12-30 May 2003 16 304 a,b,c,d,e,f,g,h,i Loan Pre-Appraisal 1-4 July 2003 2 8 a,i Loan Appraisal 1-17 October 2003 6 102 a,j,i Loan Negotiations 13-14 November 2003 2 4 a,d Review 7-17 March 2004 3 a,i,k Inception 12-17 July 2004 4 24 i,j,k,p Review 1 13-18 September 2004 2 12 i,k Review 2 9-14 December 2004 2 12 i,k Review 3 25-28 April 2005 4 16 e,i,k,l Review 4 4-5 July 2005 2 4 e,k Review 5 23 January-2 February 2 22 i,k 2006 Review 6 (Mid-term) 26 February-3 March 5 30 d,k,m,n,o,p 2007 Review 7 29 January-3 February 2 12 k,q 2008 Review 8 15-16 November 2008 1 2 r Notes: a a = senior health specialist, b = senior education specialist, c = urban development specialist, d = counsel, e = economist, f = senior governance specialist, g = governance specialist, h = education adviser, i = consultant, j = principal education specialist, k = education specialist, l = director, m = social sector specialist, n = program director, o = capacity development and governance specialist, p = project officer, q = program analyst, r = project officer. b PRM provided support to the missions in the field.

BASIC DATA

A. Loan Identification

1. Country Pakistan

2. Loan Number 2048

3. Program Title Sindh Devolved Social Services Program

4. Borrower Islamic Republic of Pakistan

5. Executing Agencies Finance Department, Sindh provincial government

Planning and Development Department, Sindh provincial government Sindh Secretariat, Karachi, Pakistan

6. Amount of Loan SDR69,843,000 (equivalent to $100 million) from ADB’s Special Funds resources

7. Program Completion Report Number PCR: PAK 1091

B. Loan Data

1. Appraisal 1 October 2003 – Date Started 17 October 2003 – Date Completed

2. Loan Negotiations 13 November 2003 – Date Started 15 November 2003 – Date Completed

12 December 2003 3. Date of Board Approval

17 February 2004 4. Date of Loan Agreement

5. Date of Loan Effectiveness

– In Loan Agreement 29 April 2004 – Actual none – Number of Extensions

6. Closing Date 1 August 2007 – In Loan Agreement 23 August 2007 – Actual none – Number of Extensions

7. Terms of Loan 1% per annum during the grace period of and – Interest Rate 1.5% thereafter

24 years – Maturity (number of years)

8 years – Grace Period (number of years)

9. Disbursements a. Dates Initial Disbursement Final Disbursement Time Interval

6 May 2004 23 August 2007 39 months

Effective Date Original Closing Date Time Interval

29 April 2004 1 August 2007 39 months

b. Amount (in SDR) Category or Last Net Amount Subloan Original Revised Amount Available Amount Undisbursed Allocation Allocation Canceled Disbursed Balance 01-DSSP 69,843,000 0 0 69,843,000 69,843,000 0 Program Total (Loan 69,843,000 0 0 69,843,000 69,843,000 0 Currency) Total ($ 100,000,000 0 0 103,231,752 103,231,752 Equivalent) ADB = Asian Development Bank, SDR = Special Drawing Rights.

C. Program Data

1. Program Cost (in SDR)

Cost Appraisal Estimate Actual

Foreign Exchange Cost 69,843,000 69,843,000 Local Currency Cost 0 0 Total 69,843,000 69,843,000

2. Program Schedule ($) Item Appraisal Estimate Actual First tranche release 23,048,000 Second tranche release 23,048,000 Third tranche release 23,747,000

3. Program Performance Report Ratings Ratings

o o 68o 00’E 64 00'E 73 00'E

NORTH-WEST FRONTIER

PAKISTAN 35 o 00'N Tarbela Dam 35 o 00'N A F G H A N I S T A N ISLAMABAD SINDH DEVOLVED SOCIAL SERVICES PROGRAM Peshawar Mangla Dam . R . R s lum Jhelum (as completed) u he . d J R n b I Sargodha a hen C Lahore P U N J A B . vi R Ra Dera Ismail Khan Multan

tlej R Quetta Su PAKISTAN N B A L O C H I S T A N . IRAN R s du Sukkur In I N D I A 0 10 20 30 40 50 26 o 00'N S I N D H 26 o 00'N

Kilometers Hyderabad ARABIAN SEA Karachi Project Locationo 64 00'E 73o 00'E Jacobabad Shah Wah Tangauni 71o 00’E BALOCHISTAN JACOBABAD Kandakot Ubaaro PUNJAB

SHIKARPUR . Mathur Mathirto o s R o 28 00’N Shikarpur du 28 00’N In Ghotki Lakhi Shahdadhot Sukkur GHOTKI Werah Branch

Kambor Khairpur Larkana LARKANA SUKKUR Project Area Kot Deli Ranipur Provincial Capital Kume Kholirpur Nathan Shah City/District Sarah Town Kothabaru National Road NAUSHAHRO Provincial Road Dadu Naushahro River KHAIRPUR Joni District Boundary Bhaj Rajha Tur Provincial Boundary NAWABSHAH Sahewan Dangrio International Boundary Nawabshah Boundaries are not necessarily authoritative.

DADU Sanghar SANGHAR

Karchat Khipra Tindo Adam Halib

Godre HYDERABAD Mirpur Khas Thana Bula Khan Kotri Hyderabad Umarkot

MIRPUR Ahmod Tar KHAS KARACHI Mathi Chachio

. Jurighani BADIN us R d THARPARKAR n Tondo Bogo KARACHI I Mithi Thatta Pangrig Islamkot Sihawal Badin Virawah

Dipla

Jati A R A B I A N Nagat Parhar S E A THATTA Shah Dandor

o 24 00’N 24 o 00’N

o 68 00’E 71o 00’E

08-4475 HR

I. PROGRAM DESCRIPTION

1. On 12 December 2003, the Asian Development Bank (ADB) approved the Sindh Devolved Social Services Program (SDSSP)1 for $220 million to support the Sindh provincial government in undertaking and sustaining wide-ranging social sector reforms. The overall goal of the SDSSP was to improve people’s education and health, thereby reducing poverty and gender imbalances. The broad purpose of the SDSSP was to increase school enrollment, and to improve access to health, clean water and sanitation services. These objectives were to be achieved by pursuing critical policy reforms at the provincial level, and by providing fiscal and technical support for local governments to support devolved social services; specifically, education and health in district governments, and water supply and sanitation (WSS) in taluka (sub-district)/town municipal administrations (TMAs). The SDSSP supported formula-based conditional grants to local governments,2 based on annual sector plans (ASPs) prepared for the entire sector, showing all sources and proposed uses of funds.

2. In August 2001, following promulgation of the Sindh Local Government Ordinance (LGO), the government began implementing the devolution plan and created three levels of local governments to function as autonomous bodies with their own responsibilities, financial sharing arrangements and revenue sources.3 District governments were made responsible for schools, colleges, and district health services, and TMAs for water supply and waste disposal, in coordination with union administrations. 4 These new responsibilities required changes in provincial structures and entailed a transfer of human and financial resources from the provinces to the local governments. The SDSSP was designed as a governance program to support provincial-level reforms and build local responsibility and capacity to effectively plan and efficiently execute demand-driven plans to address social sector needs.

3. This program completion report (PCR) provides an overview of the role SDSSP played in supporting the Sindh provincial government in the governance and fiscal reforms that were implemented at the provincial and local government levels. The program framework is in Appendix 1.

II. EVALUATION OF DESIGN AND IMPLEMENTATION

A. Relevance of Design and Formulation

4. When the SDSSP was prepared, social indicators in Sindh Province lagged well behind its economic performance. While Sindh had the highest per capita income, it was also the second least-developed province in terms of human and social development, with high levels of illiteracy, malnutrition and mortality, especially among women. The provincial government developed a comprehensive approach and commitment to reduce poverty and improve social service delivery, and in 2003 prepared the Sindh Poverty Reduction Strategy and Program (PRSP), building on the Sindh Reform Program and the Sindh LGO. The Sindh PRSP focused on equitable delivery of social services to the poor, creation of employment opportunities, and extension of microcredit to the poor. In the social sectors, it aimed to improve performance through better governance, stronger partnership with civil society and needs-based allocation of

1 ADB. 2003. Report and Recommendation of the President to the Board of Directors on Proposed Program and Technical Assistance Loans to the Islamic Republic of Pakistan for the Sindh Devolved Social Services Program. Manila. 2 The conditional grants were funds transferred for a specific purpose and could not be used for other projects. 3 The SPG created 16 district governments, 102 TMAs and 1,044 union administrations. Some districts were split in 2004–2005, and there are now 23 district governments and 119 TMAs. 4 The primary governmental institution in Pakistan

2 resources. The Sindh Reform Program aimed to address governance and fiscal reforms as the root causes of poverty and deprivation, and the Sindh LGO offered major opportunities for strengthening social service delivery.

5. The primary theme in ADB’s 2003 country strategy and program update (CSPU)5 was good governance. The CSPU emphasized the need for successful implementation of governance reforms, in particular focusing on the Government’s ambitious devolution plan. In the area of inclusive social development, the CSPU prioritized assistance for decentralized financing, planning and delivery of social services, and mainstreaming of gender issues. ADB’s support to Pakistan’s devolution includes (i) the Decentralization Support Program,6 assisting in administrative and fiscal devolution; (ii) the Access to Justice Program, 7 supporting major reforms in the judicial system; and (iii) the Decentralized Elementary Education Project.8

6. The SDSSP built on lessons from the Social Action Program (SAP), a program initiated by the Government of Pakistan in the 1990s and implemented up to 2002 to improve social services, including elementary education, primary health care, and rural WSS. The SAP demonstrated that social sector development requires a long-term approach, beginning with basic good governance in the delivery of services, while avoiding micromanagement. The SDSSP also benefited from the lessons and accomplishments of the World Bank’s Sindh Structural Adjustment Credit (SAC), which helped increase budget outlays on health and education, initiate broad governance reforms, and general capacity building for local governments. Further, the preparation of the SDSSP was supported by extensive stakeholder consultation, and the outcomes of the Second Social Action Program (Sector) Project.9 The SDSSP was relevant both at appraisal and at completion, and introducing a conditional grant mechanism in support of the devolved social services.

B. Program Outputs

7. As a multisector program dealing with three tiers of government, the SDSSP aimed to increase access to basic social services in education, health and WSS by improving the governance and financing of these services. The principal policy outcomes targeted at the outset of SDSSP were to:

(i) further devolve social services to local governments, in line with the LGO, through the delegation of administrative and financial powers to local governments and the adjustment of the roles of the provincial line departments (PLDs); (ii) improve social sector financing through increased social sector spending, the use of conditional grants, and the timely transfer of funds; (iii) improve participation and public accountability through the adoption of a transparent participatory planning process for social services and increased representation of women in local committees;

5 ADB. 2003. Country Strategy and Program Update 2004-2006, Pakistan. Manila. 6 ADB. 2002. Report and Recommendation of the President to the Board of Directors on Proposed Program and Technical Assistance Loans to the Islamic Republic of Pakistan for the Decentralization Support Program. Manila 7 ADB. 2001. Report and Recommendation of the President to the Board of Directors on Proposed Program Loan and Technical Assistance Grant to Pakistan for the Access to Justice Program. Manila 8 ADB. 2002. Report and Recommendation of the President to the Board of Directors on Proposed Loan to the Islamic Republic of Pakistan for the Decentralized Elementary Education Project. Manila 9 ADB. 1996. Report and Recommendation of the President to the Board of Directors on Proposed Loan to the Islamic Republic of Pakistan for the Social Action Program (Sector) Project II. Manila

(iv) rationalize distribution of services, staff and funds through the utilization of conditional grants in accordance with agreed eligibility criteria; and (v) encourage public–private partnerships to improve service delivery through the strengthening and improved financing of community-based organizations.

The updated policy matrix is in Appendix 2. The sections below outline the progress made under the SDSSP, and the remaining issues and challenges in the context of decentralization and devolved service delivery.

1. Further Devolve Social Services to Local Governments

8. The Pre-Project Situation. While the responsibility for providing basic services in health, education and WSS was assigned to local governments under the LGO, commensurate administrative authority was not fully devolved. The provincial government continued to exercise administrative powers over the transfer and posting of officers, hampering efforts by local governments to rationalize staff and hold them accountable for performance. In addition, local governments lacked financial control.

9. Devolution of Administrative and Financial Powers. A number of institutions, such as the Provincial Finance Commission (PFC), the Local Government Commission (LGC) and local monitoring committees have been created under the Sindh LGO to manage the transfer of administrative and financial powers to local governments. The PFC was created to design transfer mechanisms for the flow of funds to local governments, and regular intergovernmental transfers were being made through PFC awards. The LGC was responsible for oversight and external monitoring of local governments. These institutions are still being developed, although they have begun operating. For example, although the LGC was undertaking inspections and processing complaints as envisaged under the Sindh LGO, it requires greater staff capacity and resources. The lack of established rules has prevented the proper functioning of internal audit offices and elected monitoring committees, although the latter have undertaken internal monitoring of local governments. Pakistan’s other provinces appear to face similar challenges.

10. Delegation of Management Responsibilities and Authority. A number of legal and managerial issues were identified in the implementation of the Sindh LGO that either (i) prevented local governments from operating effectively as an independent tier of government; or (ii) created jurisdictional overlaps, leading to operational and legal friction between different tiers. After consultation with district governments and the PLDs, the chief secretary and the district governments approved a delegation plan to identify areas for further devolution of powers. The delegation plan addressed the establishment of monitoring committees, transfer and posting orders, issuance of contractual appointments, cost estimates for schemes in district governments and TMAs, proper recording of all items in the budgets, and mechanisms for administrative approvals. The plan has been implemented in all the SDSSP districts.

11. Provincial Line Department Roles and Responsibilities. With the devolution of administrative and financial powers to the district governments and TMAs, the PLDs needed to take on a new role focused on policy making, regulation and monitoring. The PLDs have undertaken initial steps to articulate and implement their new roles and responsibilities; the health administration has been the most progressive, with the education and local government

PLDs progressing more slowly.10 PLDs have not yet adjusted to their arms-length relationship with TMAs and district governments. Key developments in the three sectors are:

(i) Education. The Department of Education has developed a draft Sindh education plan and medium-term development plan, specifying its post-devolution role and responsibilities and providing a strategic vision for education. The Department of Education established a reforms support unit to act as an education think tank for the Sindh provincial government. The unit has played an important role in education reforms, including strengthening of the Sindh education management information system, improving monitoring and evaluation, and implementing recommendations from the 2004 Sindh education roundtable. The unit is supporting the conditional grant funding system for districts, which matches sector outcomes with pre-determined performance benchmarks. The unit is also building the managerial capacity of local governments through merit-based recruitment of managerial staff. (ii) Health. The Department of Health has published the Sindh health policy, in accordance with the national health policy, with the objective of attaining the PRSP goals as well as the health-related Millennium Development Goals. An implementation plan was developed following stakeholder consultation, with the goal of ensuring that the policy produces substantial improvements in grassroots health care. (iii) Local Government. The Local Government Department prepared a concept paper outlining devolution-related issues and challenges, and their vision for achieving progress in key areas. The department has taken additional steps towards devolution, including devolving technical sanction and financial powers to TMAs, but progress is limited by capacity constraints. The department is undertaking measures to strengthen the position of municipal officers for key services such as infrastructure and to fill vacant positions, so that TMAs may assume additional technical responsibilities over time. However, the recent move to revive the Public Health and Engineering Department undermines progress achieved under the SDSSP, and this is being addressed by ADB through a policy dialogue.11

2. Improve Social Sector Financing and Flow of Funds

12. The Pre-Project Situation. Prior to the SDSSP provincial government financing was not pro-poor and needed to be improved, in terms of allocation, flow of funds, financial management, accountability and transparency. Spending on the nonsalary components and on development activities was significantly below budgetary estimates. Resource flows to local governments, which have a limited revenue base, were unpredictable due to cash flow problems, delaying the release of funds to the service sites and preventing local governments from effectively planning and implementing development initiatives.

10 SDSSP Program Support Unit. 2007. Mid Term Review Report. Prepared by Verulam Association Ltd. Karachi. While it is labeled “mid-term”, the review took place in the last year of SDSSP’s implementation and was completed just prior to the release of the final tranche in August 2007. 11 Under the Sindh LGO, responsibilities for planning and provision of WSS services had been devolved to the TMAs. Initially, the Public Health and Engineering Department (PHED) was merged with the Local Government Department and its staff transferred to the TMAs. PHED was revived in May 2008, placing taluka officers under the command of PHED for vertical schemes and reinforcing a cap of Rs 10 million for execution of schemes by TMAs. A prior notification (dated 25 January 2006) placed taluka officers under PHED command for the execution of certain schemes.

13. Increased Social Sector Spending. As part of the SDSSP, the provincial government agreed to increase its allocation for education, health, and water and sanitation by at least 30% of overall incremental spending, and to add another $100 million, the equivalent of the Asian Development Fund (ADF) contribution. The $100 million was to be provided in the form of conditional grants, and routed through the PFC to ensure transparent transfers to local governments. In turn, the district governments and TMAs were tasked with using these funds (in combination with existing transfers) to improve social services, in line with the annual sector plans approved by their respective councils. The fund flow arrangements, disbursements, and scheme-level expenditures were in line with program expectations. In aggregate, district government and TMA records indicate that there have been real increases in resources, which were maintained throughout the program period.

14. Conditional Grants Formula. The first PFC was constituted in 2002 under the chairmanship of the Sindh finance minister, and has been empowered to determine formula- based distribution of revenues and fiscal transfers from provincial to local governments. The formula needed to be simple and based upon generally acceptable indicators to make transfers transparent, credible and predictable. While the initial formula was rather rudimentary and gave minimal indication of social service needs, over time more relevant indicators have been introduced. The latest distribution formula is based on population (50%), backwardness (40%),12 and performance (10%). 13 All districts in receipt of funds confirmed that releases were in accordance with the shares set by the PFC, and were timely after submission of the ASPs.

15. Approval of Conditional Grants. Conditional grants were transferred to those local governments that signed a memorandum of understanding (MOU) with the provincial government, agreeing to a set of conditions for use of the funds. These terms and conditions included minimum standards of service delivery, ineligibility lists, and reporting requirements for the use of funds. The majority of the district governments and TMAs have signed MOUs with provincial government. In 2007, the PFC reviewed the conditional grants system and submitted suggestions for its improvement and rationalization, which including tying conditional grants more directly to needs and basing them on performance targets. Reliable information is often not available from local governments, however, making implementation of performance grants difficult. More improvements are needed to institutionalize a conditional grant system, including appropriately designed and maintained data systems (for both fiscal and service delivery data).

16. Timely Funds Transfer. General transfers from the province to the local governments through Account IV 14 had earlier been unpredictable, both in overall amount and timing of releases, preventing local governments from effectively planning and implementing development initiatives. In FY2006, the Sindh provincial government made large up-front transfers to districts, equal to 24% of the allocated amount, followed by regular monthly transfers, which improved the predictability of provincial transfers to local governments. The provincial government relies on federal transfers for nearly 80% of its fiscal requirements, however, making the timeliness of provincial transfers dependent on timely, predictable fund flows from the federal government.

12 The backwardness index for districts is based on an education index, including the illiteracy rate of children (10 years and above), and a health index, reflecting the number of immunized children below 10 years of age. In TMAs, the backwardness index reflects the type of housing, and the availability of water and electricity. 13 Performance shares have been calculated for districts and TMAs and are given in the implementation report for performance grants. 14 Local government account.

3. Improve Participation, Linkages and Public Accountability

17. Pre-Project Situation. Devolution is based on the premise that locally managed basic services will improve responsiveness to local needs and facilitate improved delivery, as it provides a range of opportunities for enhancing political commitment and public accountability. The Sindh LGO provides broad principles for participatory processes, whereby elected representatives and government officers would work together for the development of their districts. A common problem was that communities lacked confidence and know-how to take control of their social services. The social sector performance showed signs of improvement during the first 2 years after devolution, although with great variation among districts. The Sindh LGO addressed gender issues to some extent, including the reservation of one third of reserve seats for female councilors. In practice, however, women had little voice except in positions of high authority.

18. Strengthened Participatory Planning and Monitoring. In support of the collaboration between elected representatives and government officers, the Planning and Development Department published a district planning manual with guidelines on building community involvement into local government planning and budgeting processes. Furthermore, in order to access SDSSP conditional grants, local governments were required to prepare, through a consultative process, ASPs for the education, health and WSS sectors. Devolved planning was intended to contribute to greater participation at the grassroots level, as the identification and approval of schemes and facilities require involvement from elected representatives—the nazims (elected heads of local government units) and councilors—who are from the communities and generally well placed to appreciate the needs of their constituents. The TPV noted that the coordination between elected representatives and administrative officers was improving, with their respective roles and responsibilities becoming clearer over time.

19. Increased Representation of Women. ADB has incorporated gender and development as an integral part of its support for governance reforms in Pakistan. In conjunction with a federal ministerial committee, ADB prepared a gender reform action plan (GRAP),15 which was approved by the provincial cabinet in 2004. The key reform areas of the GRAP are political participation by women, institutional restructuring to enhance the role of women, and increasing women’s employment in the public sector and their participation in policy making and budgetary processing. In support of the GRAP, the SDSSP required local governments to take steps promoting gender equality, giving priority to gender issues in ASPs and including women councilors on budget, accounts and sector committees formed under the Sindh LGO.16 The third party validation (TPV) report, 17 which assessed mid-term progress, reported that female representation in the committees was well above the stipulated 20% in all districts, with most district committees reporting a much higher ratio. Furthermore, although not required by the SDSSP, the sector committees of most TMAs had female representation. The GRAP requires further progress with respect to representation of women at senior levels in district governments and TMAs, however.

15 The GRAP was prepared under ADB. 2002. Technical Assistance to Pakistan for the Gender Reform Program. Islamabad, and was further supported under the DSP through a TA Loan for Gender and Governance Mainstreaming (ADB. 2002. Report and Recommendation of the President to the Board of Directors on the Proposed Program and Technical Assistance Loans to the Islamic Republic of Pakistan for the Decentralization Support Program. Manila.) 16 The gender mainstreaming requirements were spelled out in the MOU signed between the provincial and local governments. 17 PSU-SDSSP. 2006. Third Party Validation. Report on Investments. Health, Education, Water Supply & Sanitation Sectors. First Year of Program (2004-05). Karachi.

4. Rationalize Services and Set Minimum Standards

20. Pre-Project Situation. Following devolution, the budgets of the district governments barely covered the expenses for the recurrent obligations that were necessary to operate the existing services transferred to them. As a result, new development spending was effectively frozen. Further, while administrative responsibilities were devolved, the budget for salaries was not entrusted to the districts, so the district governments had little control over provincial staff and staff transfers.

21. Improved Quality of Annual Sector Plans. Much effort has gone into developing district government and TMA ASPs using the SDSSP guidelines. The process of preparing ASPs has helped build the capacity of local government officers to compile information, and improved their understanding of the planning cycle. The regular transfer of these local officers has led to a loss of institutional knowledge, however. The guidance provided by the program support unit (PSU), and particularly the local support units (LSUs) established in each district, ensured that there were few deviations from the procedural requirements under the SDSSP.

22. The preparation of ASPs required a paradigm shift from scheme to sector planning. Both the MTR and TPV found that planning was done mostly on an ad hoc basis, with ASPs being a collection of schemes selected for funding, rather than a plan for the development of the sector as a whole. This stems from a lack of training, capacity, and planning officers (many posts are vacant). While the PSU tried to address some of the deficiencies by preparing new guidelines for the ASPs, the linkage with the design of the annual development plan remains poor, both at the provincial and district levels. Planning and development at the provincial and district levels will require further coordination.

23. Rationalized Distribution of Services, Staff and Funds. In the MOUs between local governments and Sindh provincial government, it was stipulated that local governments would use the conditional grants in the first instance only for rationalization of existing facilities and staff. In case of investments in new facilities and staff, local governments were required to prepare a technical and financial feasibility plan to demonstrate how services would be operationalized. In summary, the conditional grant funds have been utilized in line with the eligibility criteria.

24. Overall, 63% of the ADF funds have been utilized to finance conditional grants. The program was terminated abruptly in the third year, with only 16% of the targeted funds released. The majority of funding in education was allocated in line with sector priorities, namely the upgrading of (primary) schools (35%), construction of structures for shelterless schools (30%), and the provision of basic facilities (14%). In the health sector, the largest share of the funds went to the improvement of services (27%), upgrading of hospitals (24%), and support for specific health programs, such as maternal and child health care (13%) and routine immunization (9%). In the WSS sector, more than 60% of the interventions concerned rehabilitation and extension schemes. The majority of the allocations shifted from the traditional water supply (32%) to drainage (46%), which indicates a change in the planning approach. For more details, see Appendix 3.

25. Improved policy on drinking water supply and solid waste management. With the help of ADB TA,18 the Sindh provincial government prepared a solid waste management policy for Sindh, including a roadmap for future actions, as well as interim water and sanitation policy, closely aligned with the federal policies for drinking water supply and sanitation. In addition,

18 ADB. 2004. Technical Assistance on Capacity Building for Environmental Management in Sindh. Manila.

TMAs were tasked with preparing master plans for drinking water supply and sanitation according to their administrative and technical capacity. The majority of the TMAs prepared a master plan by the end of the program. These master plans, however, were typically based on inadequate information, and none of the required surveys were carried out (this was a tranche condition). Technical support to improve the quality of the master plans will be required.

5. Encourage Public–Private Partnerships for Improved Service Delivery

26. Pre-Project Situation. Although the Sindh LGO envisaged partnerships between local governments and civil society to extend social services, local governments were reluctant to involve communities. The performance of citizens’ community boards was poor. A more concerted effort to achieve these partnerships was needed.

27. The Sindh provincial government prepared an overall plan to strengthen the role of community-based organizations (CBOs), improving the registration and monitoring of CBOs, strengthening their capacity to achieve the required standards, and making them eligible for funding through a simple accreditation.

28. Strengthened Community-Based Organization Social Service Delivery Role. Under the SDSSP framework, school management committees (SMCs), 19 health management committees (HMCs)20 and village development associations (VDAs)21 were created to support the education, health and WSS sectors, improve efficiency of service delivery, and foster community participation. SGP ceased funding these CBOs in FY2006, however, and the sustainability of this activity is therefore not ensured.

29. Increased Community-Based Organization Financing. As required in the MOUs, a portion of the conditional grants were allocated to CBOs by the district governments (25%) and TMAs (10%). In addition, a CBO integration strategy was developed and workshops were organized to assist CBOs in preparing meaningful and viable proposals to access these funds. None of the funds allocated to the local governments have been released under the SDSSP, however.

C. Program Costs and Disbursements

30. The SDSSP was supported by a program loan of SDR69,843,000 ($100 million equivalent) from ADB’s Special Funds resources (ADF), and a second program loan of ¥11,968,550,000 ($110 million equivalent) from ADB’s ordinary capital resources (OCR). The SDSSP became effective on 29 April 2004 for three years and was to be released in three tranches in periods of at least 1 year. The first tranche of $100 million was released on 6 May 2004, subsequent to the Sindh provincial government’s compliance with the first tranche conditions set out in the Loan Agreement. The second tranche of $70 million was released on 14 July 2005. The third and final tranche of $40 million was released on 23 August 2007. The PSU carried out much of the work with local governments and PLDs for meeting the tranche conditions. However, recruitment of consultants under the attached TA loan to build local government and PLD capacity could helped avoid much of the delay in meeting some tranche release conditions.

19 SMCs were given a number of powers and responsibilities to improve operations and maintenance of schools, such as the procurement of school equipment, the hiring of teachers on a contract basis and the monitoring of attendance of teachers and pupils. 20 HMCs were established as a step towards autonomy of hospital management, and were authorized to collect, retain, and utilize user fees and other charges. 21 VDAs were established to take over and operate water schemes in rural areas.

31. The ADF loan was provided to finance direct transfers to local governments, as conditional grants to support devolved social service delivery. The OCR loan was provided to the provincial government to finance sustained reforms after the close of the program, through prepayment of high-interest cash development loans.

D. Program Schedule

32. The three tranches of the SDSSP were released within the 3-year program period. The third tranche, however, was released 6 months later than originally scheduled. The delay resulted from several obstacles. First, there was a lack of reliable data and limited capacity at the TMA level, which made it difficult to substantiate various policy conditions. The limited TMA- level capacity caused problems in preparing viable master plans for drinking water supply and sanitation, and LSUs were mobilized to support the TMAs in the preparation of master plans and data collection. A second obstacle was the timing of the transfer of conditional grants. The LSUs were mobilized late in the process, and a limited number of local governments prepared their ASPs on time, stalling the transfer of the second round of conditional grants. By early 2008, the conditional grants financed under the first ADF tranche were released to most districts and TMAs. The conditional grants under the second tranche were released to almost all the TMAs and half the districts, and only a small percentage of local governments had accessed the third round of conditional grants. The PSU and LSUs continued to provide support to the local governments until the closing date of the TA loan.

E. Implementation Arrangements

33. The Sindh Finance Department was the executing agency (EA), responsible for overall program planning, coordination, monitoring and TA support. The Sindh Planning and Development Department and the PLDs were responsible for planning, implementation and monitoring of sector-specific policy reforms. The implementing agencies were (i) the district governments for the conditional grant support for the education and health sectors, and (ii) TMAs for WSS. Local governments were to assume responsibility for CBOs as development partners and monitor their activities. Appendix 4 shows the program organization and responsibilities.

34. The implementation arrangements were adequate to deliver program outputs. The selection of the Sindh Finance Department as EA ensured that linkages with the budget and the PFC mechanism were in place from the outset, while providing independence from the PLDs, whose roles had also changed. The PLDs were included in the provincial steering committee, and were thus involved in providing overall strategic guidance, program coordination, monitoring, and reporting to the provincial government. The technical support was well conceived, with the establishment of a PSU in the Finance Department to manage and monitor the program and to manage the TA, and the creation of LSUs in support of district governments and TMAs.

F. Conditions and Covenants

35. The SDSSP policy matrix consisted of three tranches and a total of 52 conditions: 17 for the first tranche, 18 for the second tranche and 17 for the third tranche (see Appendix 2). At the end of the program, upon release of the third tranche, two deferred second-tranche conditions and 12 third-tranche conditions were fully complied with; one deferred second-tranche condition and three third-tranche conditions were substantially complied with; and one third-tranche condition was partially complied with.

36. A waiver was obtained at the closure of the SDSSP for the tranche condition requiring the district governments and TMAs to maintain the level of social sector expenditures. In FY2005, seven new district governments and 17 new TMAs were created. Since there were no baseline data available for the newly created district governments and TMAs, it was impossible to demonstrate compliance. Implementation of the activities related to the tranche conditions that were not fully complied with continued under the TA loan. The PSU and LSUs continued to support the local governments in the utilization of the approved conditional grants, and in the development of ASPs for third-round grants.

G. Related Technical Assistance

37. A TA loan22 for an amount equivalent to SDR 6,984,000 (equivalent to $10 million) was approved in support of the SDSSP, to enable the establishment of the provincial PSU and the LSUs at district level, and to support local governments and the PLDs with initiatives in line with the policy reform agenda of the SDSSP. The TA loan was declared effective on 29 April 2004, for a 4-year period, and closed on the original closing date of 1 August 2008. Cumulative disbursements as of 31 August 2008 were $1.856 million, representing a disbursement rate of 18.56%. Although disbursements from these allocations were low—due in part to delayed approval of the PC-I23 and the related delayed mobilization of the consultants—the PSU has managed to undertake a sizeable number of activities on a more conservative budget than originally estimated. A detailed project completion report will be prepared at a later stage.

H. Consultant Recruitment and Procurement

38. The provincial government recruited domestic consultants according to ADB’s Guidelines on the Use of Consultants. Early TA implementation delays were due to late approval of PC-I, which delayed mobilization of the PSU and the LSUs. The recruitment of program officers from within the line departments has played a role in overcoming PLD resistance. At the same time, however, recruitment of most key staff from within the provincial government has limited the capacity of the PSU. Program implementation would have benefited if capacity had been complemented with senior-level international consulting input, as originally envisaged . The lack of qualified candidates willing to accept the remuneration suggested by the provincial government was a major constraint in recruiting consultants, especially for the LSUs. Remuneration issues have resulted in frequent turnover within the LSUs, and affected continuity.

I. Performance of Consultants, Contractors, and Suppliers

39. The only TA provided has been in the form of support to the PSU and LSUs. Both the PSU and LSUs have been highly beneficial and appreciated. The PSU was the main driver contributing to the accomplishments under the SDSSP. The role of the LSUs as program coordinators, facilitators and change agents was much appreciated, despite the late fielding of the LSU officers, and chronic understaffing. Districts and TMAs benefited particularly from technical support in budgeting, planning and monitoring.

22 ADB. 2003. Report and Recommendation of the President to the Board of Directors on Proposed Program and Technical Assistance Loans to the Islamic Republic of Pakistan for the Sindh Devolved Social Services Program. Manila (TA Loan 2049-PAK). 23 PC-I is the prescribed form issued by the Planning Commission of Pakistan for project documents.

J. Performance of the Borrower and the Executing Agency

40. The performance of the borrower and the EA was satisfactory. The PSU played a key role in monitoring program progress and acting as the de facto champion on behalf of the Finance Department and the provincial government. The PSU focused on program implementation and supported the devolution process. Without this commitment and the strong leadership of the PSU, the SDSSP would not have been as effective. More attention should have been paid by the PSU to ensuring and sustaining changes within the PLDs, however. PLDs will require significant support as they define and adapt to their new roles; until they do so, they will be unable to provide the support required at district and TMA level. The PSC actively steered program implementation, with the support of the PSU, and conducted nine meetings over the period of the SDSSP. 24 The PSC was preoccupied with operational issues and relationships with the PLDs, however, and did not address policy.

K. Performance of the Asian Development Bank

41. The performance of ADB was satisfactory. The relationship between the provincial government and ADB is longstanding and positive, and both parties were able to express concerns and exchange views. The SDSSP program director and the ADB mission leader for program implementation remained in those positions throughout much of the program period, and this contributed considerably to the continuity and progress of the SDSSP. This continuity and regular communication was important, given the changes in the environment during the implementation of the SDSSP, with restructuring of ADB headquarters departments and realignment of operations between ADB headquarters and the Pakistan Resident Mission.

III. EVALUATION OF PERFORMANCE

A. Relevance

42. The SDSSP design is considered “relevant”. The introduction of the program was timely, as the social services were being devolved following promulgation of the Sindh LGO in 2001. Decentralization and good governance were high on the agenda of both the provincial government and ADB. The SDSSP was well designed, with a clear link between program outputs and policy outcomes. Some of the tranche actions reinforced policy change and operational activities. As reported in the MTR, the program achieved considerable success at the local government level, where the most change occurred.

43. The location of the SDSSP within the Sindh Finance Department gave the program a clear fiscal emphasis, and reduced the risk of negative interference from PLDs. In hindsight, more emphasis should have been placed on changes needed within PLDs to allow them to implement their new roles in support of improved service delivery. The development of new roles and responsibilities for PLDs was itself a major reform, one that needed more specific policy actions and external support. This would have helped PLDs take on their new roles, and addressed their resistance to change and reluctance to share power.

44. The requirement that local governments prepare ASPs as a prerequisite to accessing conditional grant support has had a significant impact. The exercise of preparing ASPs, the key institutional process for SDSSP, has helped considerably building the capacity of the staff in local governments. Towards the future, planning processes and local skills require further strengthening. Historically, there has been little or no sector-based planning, with salaries

24 The minutes of the PSC meetings are posted on the SDSSP website: www.sdssp.gov.pk

12 accounting for the major share of budgets. The only scope for development was through the small non-salary budget and development projects, which focused almost exclusively on buildings and equipment. The opportunities provided by the ASP process are only beginning to be appreciated. Greater emphasis on coherence, with plan priorities at sector level and the inclusion of a monitoring framework related to the impact, is needed to improve the outcome.

B. Effectiveness in Achieving Outcome

45. The SDSSP is considered “less effective” in achieving sector outcomes. The intended outcome of the program was to improve devolved social services in local governments, resulting in increased school enrollment, health coverage and WSS services, to be accomplished through improved governance and financing of social services. Based on the results of the Pakistan social and living standard measurement survey25, there has thus far been no marked change in the social indicators far, as illustrated in Appendix 1. The MTR remarked that while it is difficult to claim significant progress towards the overall outcome, there are results in a small number of districts, especially with respect to the health indicators. In those cases where districts have made appropriate use of the funds the impact has been significant.

46. At the same time, the provincial government committed to increase social spending above the normal increment. More specifically, the provincial government agreed to maintain the level of social sector expenditure as a proportion of total revenues at the FY2004 level, and allocate an additional $33 million each year thereafter. While the provincial government’s social sector expenditures increased for FY2005 and FY2006, there was a sudden drop in the allocation for education in FY2007, reducing the total social expenditures for that year, as illustrated in Appendix 5.26

47. The program was overambitious in aiming to cover different sectors and to accomplish all actions within a 3-year period. While the multisectoral approach was not a problem at the district level, for health and education, it was more problematic for WSS in the TMAs. The TMAs were newly created under the Sindh LGO, but received insufficient support to perform their tasks. As a result, low-level (level 9) officers became responsible for high-value WSS projects. A greater focus on longer-term budget increases for the social sectors and on planned high- impact improvements in service delivery with a 5-year program would have been more effective.

48. The program had five key policy areas that supported the program outcome. The MTR found reasonable progress towards two key policy areas, only limited progress towards two others, and only early signs of progress in the final key policy area. The social sector financing for local governments improved during the program period. Local governments valued the SDSSP support and saw it as adding value and providing needed additional funding. The SDSSP was most successful in the improvement of participation and accountability, with an emerging sense of accountability for social services at the local level. The MTR found only limited progress towards further devolution of social services, mainly due to political ambivalence to decentralization at the provincial level. It saw also only limited progress in the rationalization of services and the setting of standards, mainly because of limited acceptance by the PLDs, and the limitations of the initial ASPs. There were also only early signs of progress in relation to public–private partnerships with the SMCs, HMCs and VDAs. The outcome of the program will be further assessed TA loan PCR, due in 2009.

25 The Pakistan social and living standards measurement survey (PSLM) is one of the main mechanisms for monitoring the implementation of the MDGs and PRSP. 26 Finance Department, Government of Sindh. 2008. Budget Analysis 2007-08. Karachi

C. Efficiency in Achieving Outcome and Outputs

49. Management of SDSSP has been “efficient”, both by the EA and by ADB. The continuity of the project management and the regular interactions contributed to relatively smooth program implementation. The PSU has been the driver of the program. Its independence and the recruitment of a strong team have been critical factors in the program’s success. The recruitment of sector specialists from within PLDs was an effective way to gain acceptance, but the PSU could have worked more closely with the PLDs in the use of TA resources. The LSUs were also a valuable asset as facilitators for program implementation. Earlier recruitment of LSU staff, support for planning skills, and the appointment of some external advisors with international experience on devolved social service delivery would have enhanced implementation. The loss of power by the provincial government and the confusion over the new roles and responsibilities resulted in some political and bureaucratic ambivalence at the provincial level. Adjustment by the PLDs to their new role was a required action in the policy matrix. A firmer interpretation of the policy action regarding the effective adoption of the new roles, supported with necessary TA, could have addressed the ambivalence at an early stage.

50. The additional financing provided under the SDSSP was delivered in a rational way. The MOU signed between the provincial and local governments required that conditional grants be used first to support the operation of existing facilities and staff, with investment for new services requiring a clear technical and financial feasibility plan. The procedures and guidelines devised by the PSU were comprehensive, and the guidance provided by both PSU and LSUs have largely ensured compliance with the SDSSP grant conditions.

D. Preliminary Assessment of Sustainability

51. The SDSSP results are likely to be “less sustainable”. Although there are initial signs of change in access to services at the local level, continued technical, financial and political support is required to sustain the reforms. The conditional grants introduced under the SDSSP, although considered as a model for other donor-funded grant mechanisms, require further improvement and continued support to become sustainable. The PFC award mechanism for conditional grants transfers, further developed under the SDSSP, is likely to remain.

52. One of the main accomplishments of the SDSSP is the greater participation and the emerging sense of accountability in social services delivery at the local level. The proximity of the local governments to the public is enhancing accountability, and resulting in a more positive attitude towards service delivery and performance. The supremacy of the councils in the final decision-making stage assures community involvement. Local revenue levels remain low but there are some signs of effective management of a wide range of inputs from provincial, federal and others sources. The MTR was of the impression that local government is becoming firmly established. There are still risks, however, that could affect sustainability, particularly the continuation of the reforms and the provincial level impetus for change and reforms. Additional support is required for (i) team work; (ii) accountability of local elected politicians; (iii) financial planning; (iv) planning and delivery of effective social services; and (v) public–private partnerships, including work with NGOs, civil society, and the private sector.

53. The provincial government was expected to increase social sector spending under the PRSP to achieve its social sector goals. Under the SDSSP, the provincial government agreed to allocate additional funds in support of devolved social services. The entire ADF loan was allocated to cover the cost of the conditional grants to local governments during the program period. The savings generated under the OCR loan (through restructuring of high debts) would be utilized to sustain the financing of the grants beyond the program period. To make devolved

14 social services sustainable in the future, local governments will need to develop their own revenues—through tax collection and cost recovery for services provided—in addition to relying on increased spending provincial-level spending. Early evidence indicates that the provincial government faces challenges in maintaining its commitment to increased social sector spending, while local tax reforms in support of local government revenue collection still need to be initiated.

E. Environmental, Sociocultural and Other Impacts

54. The SDSSP has had other positive impacts. First, the program had a strong focus on gender equity, with the GRAP being approved by the provincial government in 2004. Female representation in program activities reached the stipulated 20% in the districts, and there was considerable female representation in sector committees. However, the lack of female staff in senior positions in local governments requires that the province fully implement the GRAP. Support for social services, devolution, and community participation resulting in improvements in locally available social services will over time have a positive impact on the poor. The targeting of social services for the poor and vulnerable will require more specific information and planning.

55. The SDSSP was classified as environmental category B. In line with the requirements under the MOUs, signed by the local governments, the vast majority of the interventions concerned the upgrading of existing infrastructures. New construction required feasibility studies, and all plans had to be cleared by the PSU, which ensured that environmental measures to avoid significant environmental impacts were included in the proposed interventions. In addition, ADB provided TA on capacity building for environmental management.

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS

A. Overall Assessment

56. The SDSSP is rated “partly successful” (see Appendix 7). The program was well designed, with a logical flow between program outputs and policy outcomes. Despite the slow pace, implementation progress has been consistent and SDSSP has gained a positive image and has put in place key building blocks. The SDSSP was most successful in the improvement of participation and accountability at the local level. In addition, when used effectively, the supplementary funds provided under the SDSSP have had a significant impact. There is, however, anecdotal evidence that the diversion of funds by the local elite may have reduced the impact of the transfers in many districts. While considerable effort was expended in the development of the ASPs, which contributed to the planning capacity of the local governments, there was often a lack of consultation during the implementation, with ASPs being prepared by the technical administrators (executive district officers) and expedited through the council in order to secure release of the funds. Continued support is required to improve the quality of the SDSSP reforms. If reforms initiated under the SDSSP are not continued, there is a risk that performance and education, health and WSS services will decline.

57. There is continuing political ambivalence to decentralization within the provincial bureaucracy. Decentralization, as formulated in the LGO, was a federal initiative, which received limited support from the provincial government, as its role was not fully clear in the legislation. The PLDs were uncertain about their role, and resistant to the loss of political power and administrative control, with the result that they did not fully embrace their new role. Anomalies in the LGOs remain (in Sindh and other provinces)—such as in the overlap of vertical programs managed at the provincial level and locally supported programs—and these need to be addressed to improve devolution implementation.

B. Lessons Learned

58. There is continuing political ambivalence to decentralization within the provincial bureaucracy. Decentralization, as formulated in the LGO, was a federal initiative, which received limited support. One year before the completion of the SDSSP, an independent mid-term review evaluated progress with policy reforms under the program, the first one of its kind supporting devolution of service delivery on the provincial level (footnote 10). The report recommended that future support to devolved social service provision should take account of the following lessons:

(i) The transfer of responsibility for social service delivery from the provincial government to district and TMA level is a major institutional shift. Even with strong commitments, SDSSP should have been undertaken for a minimum of 5 years. (ii) Progress has been just sufficient to warrant a second phase of 5-years duration, and only if the weaknesses in design, delivery and at the policy outcome level are addressed. (iii) Devolved social services delivery is new in Pakistan, and support, advice, stimulation, critique and capacity are essential. Effective TA must be included in any similar support program, drawing on international local government best practice. (iv) There was an inherent ambivalence in SDSSP between its emphasis on social sector performance and impact and support for decentralization. Any similar support program should be more strongly focused on social sector impact at the local level. The fiscal leverage of the conditional grant mechanism should be targeted at encouraging change at the local level with separate incentives to encourage change within the PLDs.

59. The transfer of responsibility for social service delivery from the provincial government to local governments involves a major institutional shift. It requires a long trial and error process, with carefully designed reforms that are timed in line with available capacity. Project design should be kept relatively simple and modest in scope, and tailored to the stage of development. A long implementation period combined with substantial TA is needed to undertake fundamental institutional and governance reforms that require changes in the way of working, the mindset, and the political culture. In case of innovative techniques, TA should precede program lending to build capacity to implement new interventions.

60. Political commitment to the core policy and institutional reforms, in particular at the central level, is essential to obtain significant results in policy programs that aim to introduce governance reforms. The program will be more appropriate and likely to succeed if political factors are well understood and sufficiently accounted for in the program design. This requires an extensive consultation process, involving all the main stakeholders.

61. A key premise of SDSSP was confirmed—that institutional reforms in the social sectors cannot be addressed in isolation, but need to be combined with governance and related institutional reforms in the government as a whole. In addition to such reforms, attention should to be paid to institutionalizing community participation. Active community involvement contributes to the accountability and eventually the quality of service delivery.

C. Recommendations

1. Program Related

62. A total of more than Rs3 billion has been allocated to the districts and TMAs as conditional grants. In order to assess the impact of the impact of the schemes financed from the grants, the provincial government has commissioned an independent TPV, reviewing 25% of the interventions (Appendix 6). It is recommended that the project completion review of the TA loan, scheduled for 2009, review the findings of the TPV as part of a comprehensive assessment of the SDSSP’s impact on service delivery in Sindh.

63. Given that some activities under the SDSSP require continued support, the provincial government and ADB have prepared a new program—the Sindh Growth and Rural Revitalization Program27—which has a broader governance and rural development focus. The service delivery component of the new program has been built on the accomplishments and lessons of the SDSSP. The Department of Health has made the most progress in redefining its role under the SDSSP program, and is eager to receive continued support under the new program; therefore, measures to further improve devolved service delivery are focused on the health sector, promoting private sector and civil society participation in service delivery.

64. The SDSSP is the first program on decentralization and devolution of social services to be completed. Similar programs in Punjab and Balochistan, as well as the DSP with the federal government, will be completed in the near future. In addition to a PCR for each program, it is recommended that a thematic evaluation report for the entire sector be prepared.

2. General

65. ADB has supported decentralization and the devolution of social services for some time. Throughout the 1990s it supported the Government’s SAP program through a series of projects, as part of a donor consortium. Following the 2001 decentralization and enactment of the LGO, ADB was the only agency to continue to provide major support for the reforms. The experience gained during the implementation of the DSP and the DSSPs should be effectively utilized by ADB teams in supporting federal, provincial and local governments in improving overall government efficiency in service delivery. Specifically, adequate policy, advisory and TA support should be provided for institutional reforms and capacity development specifically at provincial and local government levels.

66. With hindsight, the move towards decentralization in Pakistan was driven from the federal capital. The provinces were initially guarded. Subsequently, they began implementing the necessary institutional changes. Yet, there have been capacity and resource constraints, as well as concerns over giving too much power away to lower levels of governments. There are discussions and efforts underway in Pakistan now for the provinces to take some of the control back. The fundamental aim of devolution is to take services closer to people, and to serve them effectively and efficiently with transparency and accountability. Before introducing any fundamental shifts that will affect the premise of devolution, it is critical that the governments - at the federal as well as provincial levels - undertake a comprehensive and objective assessment. ADB, given the significant support provided through the DSP and DSSP, should work with the other development partners, to assist the governments in launching carefully designed second generational reforms and capacity development.

27 ADB. 2008. Report and Recommendation of the President to the Board of Directors on Proposed Loan to the Islamic Republic of Pakistan for the Sindh Growth and Rural Revitalization Program. Manila.

Appendix 1 17

PROGRAM FRAMEWORK

Design Summary Performance Indicators and Comments Targets (2004–2007) Goals Literacy rate (age 10 years and over) not available The impact will be measured as part of the TA loan PCR,28 Infant mortality rate/1,000 live births to be undertaken in 2009. Maternal mortality ratio/100,000 live births Total fertility ratea

Purpose 2004– 2005–2006 2006– 2005 PSLM 2007

PSLM PSLM 84%; 65% 88%; 71% 88%; 68% With the exception of the gross Gross primary enrollment (boys; girls) primary enrollment of boys and Gross middle school enrollment 42% 44% 43% girls, there are no marked changes in the social Proportion of women delivering in institutions n.a. n.a. n.a. indicators. The outcome will be measured through the TA loan Contraceptive prevalence rate n.a. n.a. n.a. PCR, to be undertaken in Full immunization coverage (12–23 months) 73% 71% 65% 2009, Access to safe drinking water 44% 43% 47% Proportion of households with a toilet or latrine 84% 82% 85%

Outputs

1. Further devolve social services to The outputs are covered in- local governments depth in the main report (II, B—Program Outputs), and in a. Delegation of administrative and financial Powers transferred by year 1 Appendix 2 powers to local governments b. Intra-sector delegation of responsibilities The majority of district governments and authorities implement the plan in year 3 c. Provincial line departments focus on New roles implemented by year 3 policy making, regulation, capacity

building, and monitoring and evaluation

2. Improve social sector financing a. Additional budget for social sectors on Targeted additional funds provided in top of revenue-based increment years 1, 2 and 3

b. Needs-based formula for distribution of Agreement in year 1, PFC mechanism conditional grants to local governments in year 2 c. Transfer funds to Account IV in a timely Up-front financing of 25% of non-salary manner budget by year 2 3. Improve participation, linkages and accountability a. Approval and implementation of gender Plan approval in year 2, 20% female reform action plan representation in committees by year 3

28 ADB. 2003. Report and Recommendation of the President to the Board of Directors on Proposed Program and Technical Assistance Loans to the Islamic Republic of Pakistan for the Sindh Devolved Social Services Program. Manila

18 Appendix 1

Design Summary Performance Indicators and Comments Targets (2004–2007) b. Use of participatory planning process for By year 3, planning is adequate in 50% preparing annual sector plans showing of district governments and 25% of all major sources and uses of funds TMAs c. Management agreements between By year 2, agreements for the majority provincial and local governments of local governments 4. Rationalize services and set standards a. Prioritize services for the poor, women, 50% of local governments by year 1, and vulnerable groups and 90% by year 3 b. Propose rationalization of services, staff 50% of district governments by year 2, and funds 50% of TMAs by year 3 c. Recruit female staff on contract and merit Selective recruitment in year 2 basis for specific locations d. LGs agree to do feasibility study before Agreement in effect by year 2 embarking on new civil works e. Prepare interim policies for water and Year 2 for solid waste management, sanitation, and solid waste management and year 3 for drinking water supply

5. Encourage public-private partnership Approval of support for home schools, a. Strengthen the role of CBOs health boards and VDAs by year 2

Majority of DGs include support for b. Expand support for SMCs shelterless schools Health boards are authorized to retain c. Give health boards authority to receive and reuse user fees and use grant-in-aid

District governments allocate 25% of d. Increase financing of CBOs funds to CBOs by year 2, and TMAs allocate 25% of funds to CBOs by year 3

Inputs PSUs and LSUs Established by 1 April 2004 Program loan of $110 million (OCR), Timely tranche releases Program loan of $100 million (ADF), TA loan of $10 million (ADF), and $4.4 million government counterpart funds

ADF = Asian Development Fund, CBO = community-based organization, LSU = local support unit, OCR = ordinary capital resources, PFC = provincial financial commission, PSU = program support unit, SAC = structural adjustment credit, SMC = school management committee, TA = technical assistance, TMA = taluka/town municipal administration. a Average number of children expected to be born alive to a woman based on current age-specific fertility rates.

IMPLEMENTATION STATUS OF POLICY MATRIX UNDER THE SINDH DEVOLVED SOCIAL SERVICES PROGRAM

Policy Objectives First Second Third Conditions/ Explanations/Remarks Tranche/Actions Tranche/Actions Tranche/Actions Implementation Status Complied within Complied within Complied within Policy Outcome 1: Further Devolve Social Services to District Governments and Taluka Municipal Administrations 2 Appendix 1.1 Devolve Provincial Provincial Provincial government Complied with Report on implementation of the M&E administrative government achieves government monitors the framework submitted powers in the social devolution of establishes a implementation of sector to local administrative and framework for delegation of governments as per financial powers in monitoring the administrative and SLGO the social sectors, delegation of financial powers and including for approval administrative and publishes a report of budgets, financial powers to development district governments programs and staff and TMAs transfers from PLDs to district governments and TMAs 1.2 Delegate Provincial Chief secretary and Majority of district Complied with Report on implementation of the management government, in the district governments delegation plan by the majority of responsibilities and consultation with governments implement the districts submitted. The monitoring authorities within the district governments, approve the delegation plan committee and its working groups will devolved education prepares an action delegation plan continue to meet regularly. and health sectors, plan specifying as per SLGO responsibilities and authority of EDOs, district officers and deputy district officers 1.3 Adjust the role of PLDs articulate their Provincial Provincial government Substantially complied with Review reports on Sindh health the three PLDs for new roles and government to continues policy, education sector reform and education, health responsibilities in the approve, publish and implementation of the Local Government Department and local social sectors in initiate new role and submitted government to the relation to policy, implementation of the responsibilities of the new devolved sector monitoring, new role and PLDs and reviews structure and provision of responsibilities of the progress made in this technical support to PLDs. regard.

district governments 19 and TMAs.

20 Policy Objectives First Second Third Conditions/ Explanations/Remarks Tranche/Actions Tranche/Actions Tranche/Actions Implementation Status

Complied within Complied within Complied within 2 Appendix Policy Outcome 2: Improve Social Sector Financing 2.1 In support of the Provincial Provincial Provincial Waiver requested Expenditure data for all local Sindh poverty government agrees government, district government, district governments not affected by the split reduction strategy, to maintain the level governments and governments and in 2004-2005 of some districts and increase social of social sector TMAs agree to TMAs agree to TMAs has been compiled and sector spending allocations as a maintain the level of maintain the level of submitted above the normal proportion of total social sector social sector increment revenues at the allocations as a allocations as a FY2004 level, and proportion of total proportion of total allocate an additional revenues at the revenues at the $33 million. FY2004 level, and FY2004 level, and allocate an additional allocate an additional $33 million. $33 million. 2.2 Use needs- In consultation with PFC establishes Confirmation of Complied with Reports from district governments based transparent DGs and TMAs, the mechanism for the smooth and TMAs compiled and submitted formula for the provincial needs and implementation of the distribution of the government performance-based PFC grant distribution conditional grant proposes an interim distribution of PFC mechanism. funds for social- formula for the grant to district sector development distribution of extra governments and funds under the loan TMAs. to district governments and TMAs as conditional grants. This formula will be considered and finalized by the PFC (or PSC, if the PFC is not operational). 2.3 Transfer of funds Provincial Provincial Provincial government Substantially complied with Finance Department report through Account IV government commits government transfers transfers of 25% of submitted. Upfront transfers of 25% in a timely manner to implement the 25% of total non- non-salary allocations implemented for districts, TMAs PFC award to salary allocations for through Account No. received 25% within the first 2 transfer funds to district governments IV to district months. Transfers for the duration of district governments and TMAs through governments and the year have been predictable and and TMAs through Account IV within TMAs within one timely. Account IV in a one month of the month of the start of timely manner, start of FY2005 and FY2006 and agrees to including for salaries agrees to transfer the transfer remaining within 2 years. remainder on a 75% of total non-

Policy Objectives First Second Third Conditions/ Explanations/Remarks Tranche/Actions Tranche/Actions Tranche/Actions Implementation Status Complied within Complied within Complied within monthly basis. salary allocations on a monthly basis. Policy Outcome 3: Improve Participation, Linkages, and Public Accountability 3.1 Ensure Provincial Provincial District governments Complied with TPV report indicating all districts

implementation of government finalizes government has have increased 2 Appendix have social sector committees with at the Sindh gender draft of the Sindh approved the Sindh female representation least 20% representation by women reform action plan gender reform action gender reform action in budget and social plan for presentation plan sector committees to to the provincial at least 20% cabinet. 3.2 Strengthen Provincial Provincial At least 50% of district Complied with TPV reviewed reports from 14 participatory government commits government governments and districts and 78 TMAs, confirming a planning and to prepare an action implements the 25% of TMAs transparent and participatory monitoring of district plan to promote provincial action plan implement a planning procedure governments and transparent and to promote transparent and TMAs, based on the participatory planning transparent and participatory planning bottom-up annual and monitoring in participatory planning procedure planning cycle district governments in district and TMAs in governments and accordance with TMAs provisions of the SLGO 3.3 Adopt the Provincial Majority of the district Provincial government Complied with PFC review of conditional grants management government develops governments and reviews the system submitted agreements a system for district TMAs have signed conditional grants between the governments and MOUs with the system and publishes provincial TMAs to access provincial a report with government, district conditional grants government. suggestions for governments and through individual improvement and TMAs that would MOUs between institutionalization. make them eligible district governments for conditional grants and/or TMAs and to stimulate social provincial sector development government Policy Outcome 4: Rationalize Services and Set Minimum Standards 4.1 Improve quality Sindh provincial District governments District governments Substantially complied with Conditional grants have been of annual sector government, in and TMAs utilize and TMAs utilized transferred to 13 districts and 119 plans of district consultation with conditional grants in conditional grants in TMAs, and physical expenditure has governments and district governments accordance with the accordance with the been reported for six districts and all

TMAs, by providing and TMAs, finalizes agreed eligibility agreed eligibility TMAs. ASPs have been analyzed 21 incentives for the social sector criteria of scope, criteria and sector priorities have been

22 Policy Objectives First Second Third Conditions/ Explanations/Remarks Tranche/Actions Tranche/Actions Tranche/Actions Implementation Status

Complied within Complied within Complied within 2 Appendix conditional grants activities qualifying process and determined and reported according to for support under the performance allocations annual sector plans prepared by district governments and TMAs 4.2 Rationalize the Provincial District governments Majority of TMAs Partially complied with List of 92 TMA master plans and a distribution of government ensures develop strategies to carry out surveys and review report have been submitted. services, staff and that MOUs require rationalize services, prepare master plans Improvement of master plans and funds district governments staff, and funds, and for drinking water development of surveys will be and TMAs to incorporate supply and sanitation undertaken by TMAs in conjunction rationalize services strategies in their according to their with the Master Plan Unit and DSUs and staff annual sector plans administrative and technical capacity Provincial District governments Complied with Recruitment at the district level is government follows a recruit staff on needs now undertaken in a transparent policy of transparent, basis using a manner by district-wide committees merit-based, transparent selection that conduct recruitment interviews. contractual, facility- procedure. specific recruitment, preferably of locals and females, with the aim of operationalizing schools and health centers Provincial District governments Complied with The MOU between the provincial and government commits and TMAs assess local governments requires that local to a ban on new civil technical and governments support existing works and (re-) financial feasibility services before embarking on opening of closed before committing expansion. Opening of closed schools, facilities and new civil works or services and establishment of new schemes, unless a (re) opening closed services require the submission of a comprehensive plan schools, schemes technical and financial feasibility for operation of and services study services has been prepared, with civil works and service operations carried out by SMCs

Policy Objectives First Second Third Conditions/ Explanations/Remarks Tranche/Actions Tranche/Actions Tranche/Actions Implementation Status Complied within Complied within Complied within 4.3 Improve policy Provincial Provincial Provincial government Complied with Interim policies have been prepared framework for government commits government prepares prepares interim and submitted. Provincial drinking water to prepare interim interim solid waste drinking water and government to plan for their adoption supply and solid policies on solid management policy sanitation policy in and eventual implementation. waste management waste management in consultation with consultation with 2 Appendix and drinking water TMAs TMAs supply Policy Area 5: Encourage Public-Private Partnership to Improve Service Delivery 5.1 Strengthen the Provincial In consultation with Complied with SDSSP stakeholder consultation role of CBOs in government prepares district governments workshops indicated need for further social service overall plan to and TMAs, provincial support. Provincial government delivery promote the role of government backed its commitment by making CBOs approves expansion adequate arrangements to promote of support to (i) home and finance all three interventions. schools for girls (ii) health boards, and (iii) VDAs Provincial Majority of district Complied with The provincial government has government governments provide agreed to expand support to school announces financial support to management committees in schools expansion of support SMCs for shelterless up to grade 12, including katchi to CBOs, including schools classes. Support to SMCs is now SMS for katchi class based on enrollment rather than on up to grade 12 and classrooms, so shelterless schools shelterless school are now supported. based on number of students enrolled rather than number of classrooms. Authorize health Complied with PSU report submitted, with Finance boards to collect, Department notification on fees and retain and use fees user charges. and user charges Majority of district Complied with Summary of district government governments provide reports showing financial assistance financial assistance to has been submitted. health boards on a pilot basis Majority of TMAs Complied with Report showing TMA transfers to

provide support to VDA accounts has been submitted. 23 VDAs to manage

24 Policy Objectives First Second Third Conditions/ Explanations/Remarks Tranche/Actions Tranche/Actions Tranche/Actions Implementation Status

Complied within Complied within Complied within 2 Appendix water supply schemes on self-sustaining basis 5.2 Increase Provincial District governments District governments Complied with Report on district government financing of CBOs government commits allocate at least 15% allocate at least 25% allocations for CBOs has been (SMCs, health that the MOUs of conditional grants of conditional grants submitted. boards, VDAs, and require district to CBOs to CBOs NGOs) in a timely governments and manner TMAs to promote increased funding of CBOs by district governments and TMAs for improved service delivery. TMAs allocate at least Report on TMA allocations for CBOs 10% of conditional has been submitted. grants to CBOs CBO = community-based organization, EDO = executive district officer, FD = finance department, GRAP = gender reform action plan, P&D = Planning & Development, PFC = provincial financial commission, PHED = Public Health Engineering Department, PLD = provincial line department, SLGO = Sindh Local Governance Ordinance, SMC = school management committees, TMA = tehsil municipal administration, VDA = village development association, WSS = water and sanitation sector.

Source: ADB. 2007. Loans 2047-PAK and 2048-PAK[SF]: Sindh Devolved Social Services Program Progress Report: Release of Third Tranche. Manila.

Appendix 3 25

ALLOCATIONS OF THE CONDITIONAL GRANTS Table A3.1: Overall ADF Status (Rs million)

Year of ADF Total Share Total ADF Balance with FD Released Allocated Released Percentage

FY 2005 1,894.86 1,760.73 134.13 92.92% FY 2006 1,526.31 1,044.21 482.10 68.41% FY 2007 1,396.85 226.22 1,170.64 16.20% Total 4,818.02 3,031.16 1,786.87 62.91% ADF = Asian Development Fund, FD = Finance Department, FY = fiscal year. Source: Finance Department, Government of Sindh. 2008. Project Completion Report.

26 Appendix 3

Table A3.2: Education, Allocations (Rs million)

First ADF Second ADF First and Second ADF Item (FY 2005) (FY 2006) Additional class rooms 20.47 20.5 40.97 3% Shelterless schools 189.61 207.42 397.03 30% Early childhood education 25.86 35.32 61.18 5% Hiring teachers 15.71 39.77 55.48 4% Rehabilitation of building 124.45 56.16 180.61 14% Provision of furniture 35.38 8.15 43.53 3% Technical and Personal Computer labs 67.5 10.14 77.64 6% Upgrading schools 281.62 176.13 457.75 35% Administrative support 5.11 5.11 0% Total 760.6 558.7 1319.3 100% ADF = Asian Development Fund, FY = fiscal year. Source: Finance Department, Government of Sindh. 2008. Project Completion Report.

Figure A3.1: Education, Allocations

500 First ADF (FY 2005)

s 400 Second ADF (FY 2006) 300 First & Second ADF 200 In PRs Million 100

s s n s ng e bs ls rt m ol tio er di ur la o o o o a h il it o pp ro ch uc ac bu rn C ch u ss s d te f fu P s s la s e g o f nd g ve c es n n o a in ti al rl ood iri io n l ad ra n te h H at io ca r st io l ld lit is ni pg i it he hi bi ov h U in d S c a r c in Ad ly eh P Te m r R Ea Ad

Figure A3.2: Education, Sector Priorities Additional Admininistrative classrooms support

Upgrading schools Shelterless schools

Early childhood Technical and PC education labs Hiring teachers Provision of furniture Rehabilitation of building

Appendix 3 27

Table A3.3: Health, Allocations (Rs million)

First ADF Second ADF First and Second ADF (FY 2005) (FY 2006) Maternal and child health care 44.16 61.27 105.43 13% Human resources 6.17 48.28 54.45 6% Improvement of services 189.96 33.59 223.55 27% Strengthening civil hospital 44.76 31.83 76.59 9% Strengthening BHU 26.5 31.31 57.81 7% Civil works 17.64 28.62 46.26 6% Strengthening of Taluka hospital 104.64 22.68 127.32 15% Strengthening of RHC/BHU 8.27 22.36 30.63 4% Strengthening of routine immunization 54.04 20.07 74.11 9% Administrative services 3.79 5.7 9.49 1% Referral system improvement 21.87 2.56 24.43 3% NGO/Private sector 9.91 9.91 1% Total 531.71 308.27 839.98 100% ADF = Asian Development Fund, BHU = basic health unit, FY = fiscal year, RHC = rural health clinic. . Source: Finance Department, Government of Sindh. 2008. Project Completion Report.

Figure A3.3: Health, Allocations

250 s 200 First ADF (FY 2005) 150 Second ADF (FY 2006) 100 First & Second A DF

In PRsMillion 50 0 e s l U) l U n t r ar es e ita H rks ita H tio es en to c rc vic sp B o sp /B za vic m ec lth ou er o it ( l w o C ni er ve s ea s f s il h n ivi a h RH u s ro ate h re o iv h U C uk f m ve p iv ild an nt g c alt al g o im ati im r ch m e in e f T in ne tr m O/P Hu em en H o en uti nis ste G al & ov th sic ng th o i y N rn pr ng a ni ng of r dm l s te Im e B he e g A rra a Str ing gt Str in fe M en en en Re th tr th ng S ng re re St St

Figure A3.4: Health, Sector Priorities

Maternal & child health NGO/Private sector Administrative care services Referral system improvement Strengthening of Human resources routine immunization

Strengthening of RHC/BHU

Strengthening of Taluka hospital Improvement of services

Civil works Strengthening Basic Strengthening civil Health Unit (BHU) hospital

28 Appendix 3

Table A3.4: WSS, Allocations (Rs million)

First ADF Second ADF Third ADF First, Second and Third ADF Item (FY 2005) (FY 2006) (FY 2007) Water supply 195.06 185.95 92.61 473.62 32% Sewerage & drainage 206.453 251.26 213.7 671.413 46% Solid waste management 93.407 153.08 73.7 320.187 22% TOTAL 494.92 590.29 380.01 1465.22 100%

Figure A3.5: Water Supply and Sanitation, Allocations

800

600 s First ADF (FY 2005) Second ADF (FY 2006) 400 Third ADF (FY 2007)

In PRs million First, Second & Third ADF 200

0 Water supply Sew erage & Solid w aste drainage management

Figure A3.6: Water Supply and Sanitation, Sector Priorities

Solid w aste management Water supply

Sew erage & drainage

Appendix 4 29

PROGRAM ORGANIZATION AND RESPONSIBILITIES: ORGANIZATION CHART

30 Appendix 5

SOCIAL SERVICE EXPENDITURES, GOVERNMENT OF SINDH

Table A5: Expenditures on social services (million Rs)

FY 2004 FY 2005 FY 2006 FY 2007 Education 17806 19713 25011 11868 Health 4073 4648 5820 5837 Others 571 863 1378 832 Total 22450 25224 32209 18537 FY = fiscal year. Source: Finance Department, Government of Sindh. 2008. Project Completion Report.

Figure A5.1: Expenditures on Social Services by the Government of Sindh 30,000

25,000

n 20,000 Education 15,000 Health Others

in PRsMillio 10,000

5,000

0 FY 2004 FY 2005 FY 2006 FY 2007

Appendix 6 31

THIRD PARTY VALIDATION

Figure A6: Expression of Interest under Third Party Validation

32 Appendix 7

OVERALL ASSESSMENT

Criterion Weight Definition under ADB Rating Rating SDSSP (%) Guidelines Description Value Rating 1. Relevance 20 Relevance is the consistency Highly relevant 3 2 of a project’s impact and Relevant 2 outcome with the Partly relevant 1 government’s development Irrelevant 0 strategy for the country, and the Asian Development Bank’s strategic objectives at the time of approval and evaluation and the adequacy of the design. 2. Effectiveness 30 Effectiveness describes the Highly effective 3 1 extent to which the outcome, Effective 2 as specified in the design and Less effective 1 monitoring framework, either Ineffective 0 as agreed at approval or as subsequently modified, has been achieved. 3. Efficiency 30 Efficiency describes, ex post, Highly efficient 3 2 how economically resources Efficient 2 have been converted to Less efficient 1 results, using the economic Inefficient 0 internal rate of return, or cost- effectiveness, of the investment or other indicators as a measure and the resilience to risk of the net benefit flows over time. 4. Sustainability 20 Sustainability considers the Most likely 3 1 likelihood that human, Likely 2 institutional, financial, and Less likely 1 other resources are sufficient Unlikely 0 to maintain the outcome over its economic life. Overall Highly successful: Overall weighted average is greater than or equal to 1.5 Assessment 2.7. (Partly Successful: Overall weighted average is greater than or equal to 1.6 Successful) and less than 2.7. Partly Successful: Overall weighted average is greater than or equal to 0.8 and less than 1.6. Unsuccessful: Overall weighted average is less than 0.8.