ASIAN DEVELOPMENT BANK TAR:PAK 34331

TECHNICAL ASSISTANCE (Financed by the Japan Special Fund)

TO THE

ISLAMIC REPUBLIC OF PAKISTAN

FOR PREPARING THE

SUSTAINABLE LIVELIHOOD IN BARANI AREAS PROJECT (PUNJAB)

September 2003

CURRENCY EQUIVALENTS (as of 31 July 2003)

Currency Unit – Pakistan rupee/s (PRe/PRs) PRe1.00 = $0.0174 $1.00 = PRs57.60

ABBREVIATIONS

ABAD – Agency for Barani Area Development ADB – Asian Development Bank CBO – community-based organization CCB – citizen community board GIS – geographic information system IEE – initial environmental examination IFAD – International Fund for Agricultural Development IT – information technology NGO – nongovernment organization O&M – operation and maintenance TA – technical assistance

NOTES

(i) The fiscal year (FY) of the Government of Pakistan ends on 30 June.

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

This report was prepared by a team consisting of K. Oswald, poverty reduction specialist/team leader; S. Ellison-McGee, and R. Ali.

I. INTRODUCTION

1. In 2002, the Government of Pakistan requested project preparatory technical assistance (TA) for a Third Barani Development Project.1 An Asian Development Bank (ADB) Fact-Finding Mission visited Pakistan from 23 April to 3 May 2003 and held meetings with Federal and Punjab provincial government departments and agencies, nongovernment organizations (NGOs), and other aid agencies. Field visits were made to earlier and ongoing barani projects and discussions were also held with district government officials in Chakwal, Gujrat, Jehlum, Narowal, and Sialkot districts. The Mission reached an understanding with the Government regarding the objectives, scope, cost estimates, financing plan, outline terms of reference, and implementation schedule for the TA.

II. ISSUES

2. The Punjab has a land area of 205,345 square kilometers, and with 73.6 million people is Pakistan’s most populated province; 68.7% of the population live in rural areas. Income poverty in Punjab increased significantly from 25.2% in FY1991 to 33% in FY1999. Poverty in the rural areas in FY1999 was estimated at 36%, and in the urban areas at 25.5%. Together with income poverty, key social indicators in Punjab have also displayed a disappointing trend. The status of rural women is poor and restrictive. The literacy rate stands at 57.2% for males and 35.1% for females, with marked urban/rural and regional differences between and within districts. Ethnic composition in Pakistan is along linguistic lines. The majority of the population speak Punjabi, with small numbers of Seraki, Urdu and Pushto speakers.2 About 45% of the farms in Punjab are smaller than 2 hectares (ha), accounting for only 12% of the total cultivated area; approximately 34% of farms are greater than 2 ha and less than 5 ha, accounting for 21% of the total cultivated area; 21% of farms are greater than 5 ha, but account for 61% of the total cultivated area. Access to land is crucial to reduce poverty. In 1990, 72% of farms were owner operated with the remainder operated under tenancy agreements. Tenurial arrangements vary, with the most common forms being sharecropping and lease. Unequal land tenure patterns have implications for income distribution, can negatively affect agricultural productivity, and can therefore be a major cause of poverty.3

3. The barani areas in Punjab cover over 7.5 million ha in 13 districts.4 Rainfall is erratic and varies greatly from the northeast to the southwest of the region. Farm sizes are small and declining, and land is fragmented. Farming systems are adapted to the natural conditions, with a variety of strategies used to avoid the risk associated with erratic rainfall. Off-farm employment, particularly in urban areas, supplements farm income where farm sizes are not viable. Seasonal labor scarcity exists. Women play an important role in farming, the workload of females outside the homesteads increasing when men out-migrate for seasonal work. Landlessness is significant.

4. In the Punjab, both the Government and its development partners have made substantial investments in barani and rural development projects in the last 20 years, and a number of projects have been implemented with support from ADB,5 the International Fund for Agricultural

1 The TA first appeared in ADB Business Opportunities (internet edition) 7 April 2003 as Barani Development III Project (Punjab). Barani means rainfed. 2 Further explanation is provided in the Summary Initial Poverty and Social Analysis of Appendix 1. 3 ADB. 2002. Poverty in Pakistan. Issues, Causes and Institutional Responses. Manila. 4 These districts are: Attock, Bhakkar, Chakwal, D.G. Khan, Gujrat, Jhelum, Khusbab, Layyah, Mianwali, Narowal, Rajanpur, Rawalpindi, and Sialkot. 5 ADB. 1985. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to Pakistan for the Second Barani Area Development Project. Manila; ADB. 1996. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to Pakistan for the Bahawalpur Rural Development Project. Manila; ADB. 1997. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to D.G. Khan Rural Development Project. Manila. 2 Development (IFAD),6 and other multilateral and bilateral agencies.7 The northern districts have been the focus of barani area projects,8 and the ongoing ADB rural development projects are working in the southern districts.9

5. The experiences and lessons learned from earlier projects show that targeting of small farmers was not achieved consistently and backup measures were not taken to ensure distribution of project benefits to the poor. This placed larger landowners with better connections, information, and financial capacity at a greater advantage. In other cases benefits were confined mostly to adjacent fields belonging to a few households. Organization of women’s groups could not be sustained. Institutional impact was minimal because local communities were not fully involved in project design and implementation. An integrated approach was not followed in the selection of subproject sites. The ongoing IFAD-supported Barani Village Development Project puts greater focus on social mobilization and community organizing, and on the formation and capacity building of women community organizations. The proposed project will build on the experiences and lessons learned from previous and ongoing investments.

6. With the Government’s strong commitment to poverty reduction, centering on empowering the poor and providing them with increased economic opportunities and greater access to physical and social assets as expressed in its poverty reduction strategy, the overall policy environment is favorable for a poverty focus investment project. The Government has embarked on new development initiatives in the productive sectors and on social and physical infrastructure provision in parallel with major economic and governance (access to justice, decentralization) reform initiatives. The provincial poverty reduction strategy assigns priority to attacking rural poverty through higher financial allocations, improving physical infrastructure and access to physical assets, balanced regional development, and development of a database for sound planning. The Partnership Agreement on Poverty Reduction (April 2002) between the Government and ADB confirms continued support to asset creation for the poor, particularly women, improving good governance including people’s participation. Therefore, the proposed project is consistent with the Federal and the provincial governments’ poverty reduction strategies, and the Partnership Agreement on Poverty Reduction between the Government and ADB. It will contribute significantly to strongly support the development, reform, and poverty reduction agenda of the Government, particularly by applying a thorough livelihood systems analysis including female and male beneficiaries’ demands and needs, bridging development gaps between subdistricts of the northern districts, and extending project interventions to the least developed districts of the Punjab.

6 IFAD. 1980. Report and Recommendation of the President to the Executive Board on a Proposed Loan to the Islamic Republic of Pakistan for the Barani Area Development Project. Italy; IFAD. 1998. Report and Recommendation of the President to the Executive Board on a Proposed Loan to the Islamic Republic of Pakistan for the Barani Village Development Project. Italy. Earlier agriculture and livestock projects included: IFAD. 1984. Report and Recommendation of the President to the Executive Board on a Proposed Loan to the Islamic Republic of Pakistan for the Gujranwala Agricultural Development Project. Italy; IFAD. 1988. Report and Recommendation of the President to the Executive Board on a Proposed Loan to the Islamic Republic of Pakistan for the Punjab Smallholder Dairy Development Project. Italy. 7 Including: UNDP. 1985. TA 708-PAK: Master Plan for Barani Area Development, for $1.3 million, approved on 15 October 1985, and financed by the United Nations Development Programme (UNDP); Japan International Cooperation Agency (JICA): Master Plan for Rural Development Project Islamabad. 8 Attock district (Attock, Hasanabdal tehsils, Jhand, Pindi, and Gheb), Chakwal district (Talagang tehsil), Jehlum district (Pind Dadan Khan tehsil), and Rawalpindi district (Gujjar Khan tehsil), and 9 D.G. Khan Rural Development Project in the DG Khan and Rajanpur districts; and the Bahawalpur Rural Development Project in the Bahawalnagar, Bahawalpur, and Rahimyar Khan districts. 3 III. THE TECHNICAL ASSISTANCE

A. Purpose and Output

7. The purpose of the TA is the improvement of the economic well-being and social status of the poor through economic, social, and sustainable natural resource management interventions. The output of the TA will be the feasibility study and design of an investment project to focus on poverty reduction in selected areas (i) not covered within the districts under previous or ongoing projects (Appendix 2, Table 1), to complement and extend project interventions; and (ii) of the least developed and other barani districts in the Punjab (Appendix 2, Table 2).

B. Methodology and Key Activities

8. The TA will be executed in two phases. In the first phase (i) background reviews and study and analysis of experiences and lessons learned from barani, rural, and agriculture development projects in Pakistan will be carried out; (ii) the basic design will be prepared for a poverty-focused project to extend project interventions to selected areas not covered within districts under previous or ongoing barani projects (Appendix 2, Table 1);10 and in parallel (iii) a wider livelihood systems analysis will be conducted in selected areas of the least developed and other barani districts in the Punjab (Appendix 2, Table 2). In the second phase, the feasibility and design of appropriate interventions focused on targeting the poor will be undertaken in close collaboration with district governments of the project areas.

9. Consultations and Workshops. Extensive stakeholder consultations will be conducted in preparing and implementing the proposed project to ensure ownership and sustainability. Stakeholder groups from the public being directly or indirectly affected by the project (women’s groups, individuals, families), elected local government representatives, relevant government agencies, and civil society organizations will participate. Workshops, focus group discussions, and appropriate media, including information technology (IT), will be used for consultations.

10. Information Technology. Use of and access to information technology and the Internet is growing steadily in Punjab province. District governments’ IT plans envisage connectivity within districts and down to the union council level by the end of 2004/2005.11 Several databases supporting these services, such as land revenue, are based on information collected through geographic information system (GIS) mapping. GIS expertise exists in government, the academe, the private sector, and NGOs. A digital atlas for the project districts, a web-based GIS system comprised of geospatial and socioeconomic indicators, would support project design planning and monitoring and promote transparency in the decision-making process. Initially the digital atlas would comprise data and information collected and generated during the TA. Later, the Government may decide that the digital atlas data should be published on the Internet via the Government of Punjab’s web portal and district government web sites. The TA will assess the need for capacity building of the district governments particularly in the areas of IT, including integrated database and use of GIS in planning and monitoring, as part of a digital atlas.

10 The project activities and interventions for these tehsils to be considered by the TA in consultation with the district governments will be in the following fields: (i) social mobilization and organization focusing on women, and functional literacy for women; (ii) agriculture and livestock extension; (iii) water resource development and management (mini- dams, ponds, sump and dug wells, pumps, on-farm -water management); (iv) utilization of available water bodies for fish culture; (v) link roads and culverts; (vi) information technology including capacity building of district governments and use of geographic inform ation system and integrated data base for planning and monitoring; and (vii) applied research in medicinal plants, soil and water conservation, and livestock and fodder. The TA will also assess options for project support to off-farm income generation. 11 For instance, Chakwal district website www.apnachakwal.com.

4 11. Livelihood Analysis. Livelihood analysis based on desk reviews and field work will be conducted in the least developed and other barani districts (Appendix 2, Table 2): (i) poverty studies12 to estimate poverty levels and characteristics, participatory poverty assessments, and profiles of poverty in the area; and (ii) sector and thematic papers on district government budgets; natural resource system; social structures, systems, and conditions; private sector; NGOs; road network; employment and incomes; agriculture; livestock; and institutional and administrative framework. The livelihood analysis will be presented to the district governments and other stakeholders (to include GIS-based presentation of basic data, studies, surveys and findings).

12. Preliminary Recommendations. The TA will recommend, in consultation with the district governments and through stakeholder participation (i) "best-bet", high pay-off prioritized entry points that will have significant impact on the livelihood of the poor; (ii) poverty targeting indicators and criteria; and (iii) a broad strategy for implementation.13 Specifically, links across sectors, between field and policy levels, between public and private sectors, between various government institutions, and between urban and rural will be identified and considered so as to provide a sound basis for the design of appropriately sequenced interventions.

13. Feasibility and Project Design. Based on selected areas and interventions agreed upon with the Government, the TA will (i) describe the project scope, area, and target group,14 including inputs and outputs, strategy, policy recommendations, training and research requirements, and the underlying technical assumptions; (ii) indicate the modalities for adopting a process approach in participatory planning, implementation, and monitoring, clearly indicating how the district government will adapt to its facilitation role, and being clearly in line with devolution; (iii) prepare cost estimates, economic and financial analyses and the implementation schedule; and (iv) prepare the project framework. Implementation arrangements will be fully aligned with the Government’s devolution efforts.

C. Cost and Financing

14. The total cost of the TA is estimated at $500,000 equivalent, consisting of $126,000 in foreign exchange cost and $374,000 equivalent in local currency cost. ADB will cover the entire foreign exchange cost as well as $274,000 equivalent of the local currency cost for a total of $400,000 equivalent. The TA will be financed on a grant basis from the Japan Special Fund, funded by the Government of Japan. The Government will provide the remaining local currency cost of $100,000 equivalent. Detailed cost estimates are given in Appendix 3. The Government has been informed that approval of the TA does not commit ADB to finance any ensuing project.

D. Implementation Arrangements

15. The TA will be implemented over 6 months, commencing in November 2003 and ending in April 2004. A firm or consortium of firms will be engaged by ADB in accordance with its Guidelines on the Use of Consultants and other arrangements satisfactory to ADB for the engagement of domestic consultants. The consultants will be selected using the quality and cost-based selection method and biodata technical proposals. The TA will require a total of 45.5 person-months of consulting services, comprising 5.5 person-months of international and 40 person-months of

12 The Summary Initial Poverty and Social Analysis is in Appendix 1. 13 The TA will examine the complementarities with citizen community boards (CCBs) registered under the Punjab Local Government Ordinance of 2001. CCBs are voluntary groups of non-elected citizens, for proactive self-help initiatives in the development and improvement of service delivery at the local level. CCBs are funded from voluntary contributions, grants, and endowments and receive support from the local governments through matching grants of up to 80% of the cost of a project. Local governments are mandated to spend 25% of their development budget through CCBs. 14 Strong emphasis will be given to the development of appropriate selection criteria for the subdistricts and communities to be included in the proposed project. 5 domestic inputs. The TA will be led by an international economist with experience of working in poverty-focused rural development projects. Domestic consultant expertise is required in social/gender issues, agricultural economics, engineering, watershed management, animal husbandry/livestock, institutions and governance, information technology/data base and GIS, and environmental impact assessment. The outline terms of reference for consulting services are in Appendix 4.

16. Overall responsibility for the TA will lie with the Planning and Development Board of the Government of Punjab. Responsibility for TA implementation will be delegated to the Agency for Barani Area Development (ABAD), which will act as the Executing Agency for the TA. ABAD will be responsible for coordination with Federal and provincial government departments and agencies; for liaison with the district governments; and for ensuring provision of requisite support to the TA consultants, including access to information and project sites and facilities. The TA consultants will have an office in Rawalpindi and field offices in the project districts. Specific assurances from the government include (i) the appointment of a qualified and experienced full-time TA project coordinator and support staff to provide support and coordination; (ii) the requisite counterpart staff to work on the TA with the consultants; (iii) the provision of appropriate transportation for government counterparts; (iv) office space, utilities, furnishings, and local communication facilities for the consultants and counterparts; and (v) assistance with data and Survey of Pakistan maps, surveys, consultations, and workshops.

17. The consultants will submit (i) an inception report within 4 weeks of the start of the study outlining the work plan for implementation of the TA, including detailed design and methodology for the livelihood analysis, and any preliminary findings relevant to the design of the project; (ii) an interim report within 12 weeks of commencing their services containing background review, livelihood analysis, report on consultation meetings, initial digital atlas, basic design to extend interventions to selected areas not covered within districts under previous or ongoing barani interventions, and recommendations for points of intervention in selected areas of the least developed and other barani districts; (iii) a draft final report containing all work undertaken in the TA within 5 months of commencing their services; and (iv) a final report within 1 month after comments on the draft final report have been provided by the Government and ADB. Tripartite meetings of the Government, ADB, and the consultants will be held in Lahore following the submission of the inception, interim, and draft final reports.

18. Initial participatory workshops will be held in the project districts to discuss the results of the livelihoods analysis, the selection criteria for project subdistricts, and the initial rural development initiatives with beneficiaries, other aid agencies, NGOs, district governments, and ADB. Additional workshops will be held in Lahore, Rawalpindi, and other locations in the Punjab at different stages of TA implementation to discuss the consultants’ recommendations for the project design.

IV. THE PRESIDENT’S DECISION

19. The President, acting under the authority delegated by the Board, has approved the provision of technical assistance not exceeding the equivalent of $400,000 on a grant basis to the Government of Pakistan for preparing the Sustainable Livelihood in Barani Areas Project (Punjab), and hereby reports this action to the Board.

6 Appendix 1

SUMMARY INITIAL POVERTY AND SOCIAL ANALYSIS

A. Linkages to the Country Poverty Analysis

Sector identified as a national priority in country poverty Sector identified as a national priority in country poverty analysis? Yes partnership agreement? Yes

Contribution of the sector/subsector to reduce poverty in Pakistan: The incidence of poverty in the Punjab (33%) is significantly higher in the rural areas (36%) than in the urban areas (25.5%). Moreover, data from the 1990s show that rural poverty has increased faster (26.5% in 1993). In terms of social indicators, over 75% of the rural poor are reported to be illiterate, with a small proportion of literate women; gross primary enrollment rates show that over 40% of rural girls are not enroled in schools, more than twice the percentage for boys. Infant mortality in rural areas is reported at 106 per 1000 live births compared with 70 per 1000 live births in urban areas, and is higher than the average for Pakistan (89/1000). There is a strong correlation between mothers’ level of education and infant mortality, with infants born to least educated mothers having twice the risk of dying within the first year after birth compared with those of more educated women. The Government has assigned high priority to development of the productive sectors of the rural economy – prevention of natural resource and environmental degradation, provision of social and physical infrastructure (roads, water), microfinance, social protection (food support, welfare), building partnerships with civil society, and governance reforms (decentralization, civil service, access to jus tice). The Asian Development Bank's (ADB) poverty reduction strategy describes poverty as a deprivation of essential assets and opportunities to which every human being is entitled. In line with the ADB strategy, the rural development activities examined in the technical assistance (TA) build on the Government’s efforts, with a core element of providing literacy/education for women in parallel with improving access to opportunities for growth in agriculture and livestock, efficient water and natural resource management, nonfarm employment, and road infrastructure, with leading roles for civil society organizations, the private sector, and local governments.

B. Poverty Analysis Proposed Classification: CPI

While the project areas include the most deprived districts in the Punjab, earlier projects have shown that targeting of small farmers and women was not achieved and project benefits did not reach the poor. It has therefore been considered essential that a strong understanding of the poverty environment and of poor households be developed before embarking on project design. This encompasses a two-pronged approach within the context of a livelihood analysis – preparation of poverty studies, and sector and thematic papers. The poverty studies will profile the characteristics of poverty and of the poor households through small sample household income and expenditure surveys, in-depth household interviews and participatory poverty assessments on a gender disaggregated basis. Area specific and gender-disaggregated poverty targeting indicators will be developed for use in the design of project interventions aimed at the poor. The sector and thematic papers, based on desk research and supplemented where needed by field work, will examine employment and incomes; natural resource systems, including common property and asset ownership by women; social structures and conditions, with particular emphasis on gender; the road network; environmental issues; nongovernment organizations (NGOs); the private sector; and an institutional assessment of government focusing on decentralization.

C. Participation Process

Stakeholder analysis. The TA will, using participatory approaches, include (i) a social assessment (social, political, and economic relations of associations; inequality; local elites; patronage; group organizations) including gender relations and asset ownership by women and titling; and (ii) an assessment of communities and formal institutions (government, private, civil society organizations) and the strengths of institutions, their role and scope. Separate assessments will be carried out for NGOs in the project districts, including participatory assessment of their outreach to different social strata and to women, and of provincial and district government at all levels, particularly in the context of decentralization. Together with the poverty studies, the assessments of social, NGO, and government institutions will provide the basis for recommendations on roles and responsibilities of the various stakeholders as well as their capacity-building needs. Extensive stakeholder consultations will be used in the TA. Workshops, focus group discussions, and appropriate media including information technology will be used in the consultations. The workshops will be held in the project districts to discuss results of the livelihood analysis and assessments, the selection criteria for project subdistricts, and the development initiatives. Project area communities, NGOs, women’s groups, district governments, government representatives, and ADB will participate.

Appendix 1 7

The TA will indicate, as part of the project design, the modalities for adopting a process approach in participatory planning, implementation, and monitoring — clearly indicating how the district government will adapt to a facilitation role.

Participation strategy? No

D. Gender and Development

Strategy to maximize impacts on women: Functional literacy will be provided in all barani districts, giving women a better opportunity to participate in project preparation through improved access to information and ultimately to loan funds. Comprehensive gender analysis will lead to mainstreaming gender throughout the proposed project.

A gender plan in line with the Gender Reform Action Plan (TA 3832) will be required and prepared during TA implementation.

E. Social Safeguards and other Social Risks

Significant/ Plan Nonsignificant/ Strategy to Address Issues Required None Resettlement None The interventions being examined under the TA will not Not require any element of land acquisition, except under road likely improvements; road alignments normally being away from dwellings, no involuntary settlement is likely. This will be screened during the TA for all proposed interventions.

Indigenous Peoples None An important marker of ethnic distinction in Pakistan is No language, and the Population Census provides data along those lines: The majority of the population in Punjab are Punjabis with small numbers of Seraki, Urdu, and Pushto speakers; people belonging to the latter linguistic groups are by no means disadvantaged or would be adversely affected by the proposed project, as language does not imply discrimination of any sort. A second data set covered by the Census refers to religion; non-Muslim minorities are Hindus (none in Punjab) and Christians (2.3% in Punjab). As the proposed project will be a core poverty intervention, any minority group belonging to the poor will be included and appropriately targeted. The analysis of social structures, systems, and conditions will provide the necessary basis.

Labor None Not applicable No Affordability Non significant Linkages and partnerships with microfinance and welfare No institutions will be recommended in the TA to ensure that low income households and the poor have greater access to credit and the vulnerable groups to welfare institutions in times of crisis.

Other Risks/ None Ownership and commitment to project strategies and No Vulnerabilities interventions will be ensured through extensive stakeholder consultations and the use of participatory approaches in project planning and design, thus addressing potential risks or vulnerabilities.

8 Appendix 2

PROJECT COVERAGE IN BARANI DISTRICTS

Table A2.1: Districts with Interventions under Barani Projects

District Tehsil Remarks Attock One of the least developed districts in Punjab (ranked 29th out of 34 districts)a Fatehjang Barani II Attock BVDP, including present Hasan Abdal Tehsil Jand BVDP Pindi Gheb BVDP Hasan Abdal BVDP as part of Attock Tehsil Chakwal Chakwal Barani II Talagang BVDP Choa Saidan Shah Jehlum Sohawa Barani I & II Pind Dadan Khan BVDP Jehlum Narowal One of the least developed districts of Punjab (ranked 32nd out of 34 districts)a Shakargah Barani I&II Narowal Rawalpindi Among the most developed districts in Punjab (ranked 5th out of 34 districts)a Gujar Khan BVDP Kahuta Kotli Sattian Rawalpindi Urban Taxila Urban-industrial complexes Muree Agroecologically different, more than 1000 mm of annual rainfall BVDP = Barani Village Development Project. a Punjab Economist Research Institute. 2001. Development Ranking of Districts in Punjab . Lahore.

Table A2.2: Least Developed and Other Barani Districts

District Description Bhakkar The second least developed district of Punjaba; about 20% of cultivated area under canal command D.G. Khan Among the least developed districts of Punjaba; covered under ADB-financed D.G. Khan Rural Rajanpur Development Project; not being considered in the TA Gujrat Among the medium developed districts of Punjaba; about 10% of cultivated area under canal command; light industry in Gujrat Tehsil Khushab The fourth least developed district of Punjaba Layyah The least developed district of Punjaba; 15% of cultivated area under canal command Mianwali Among the least developed districts of Punjaba; about 30% cultivated area under canal command Sialkot Among the most developed districts of Punjab (ranked 7th out of 34 districts)a; major export industry in Sialkot Tehsil and light industry in Daska Tehsil; Pasrur Tehsil least developed a Punjab Economic Research Institute. 2001. Development Ranking of Districts in Punjab. Lahore.

Appendix 3 9

COST ESTIMATES AND FINANCING PLAN ($'000)

Foreign Local Total Item Exchange Currency Cost A. Asian Development Bank Financinga 1. Consultants a. Remuneration and Per Diem i. International Consultants 99.0 0.0 99.0 ii. Domestic Consultants 0.0 160.0 160.0 iii. Per Diems 13.4 10.0 23.4 b. International and Local Travel 3.0 3.0 6.0 c. Reports and Communications 0.0 5.0 5.0 2. Equipmentb 0.0 10.0 10.0 3. Vehicle Rental Costs 0.0 10.0 10.0 4. Workshops and Consultationsc 0.0 6.0 6.0 5. Surveysd 0.0 50.0 50.0 6. Miscellaneous Administration and 0.0 5.0 5.0 Support Costse 7. Representative for Contract Negotiations 3.0 0.0 3.0 8. Contingency 7.6 15.0 22.6 Subtotal (A) 126.0 274.0 400.0

B. Government Financing 1. Counterpart Personnel, Remuneration, and 0.0 16.0 16.0 Per Diem 2. Office Accommodation and Utilitiesf 0.0 20.0 20.0 3. Furniture and Fixtures 0.0 6.0 6.0 4. Workshops and Consultationsg 0.0 6.0 6.0 5. Supply of Data, Maps, and all Official 0.0 8.0 8.0 Documentation 6. Local Travel and Vehicle(s) Costs 0.0 15.0 15.0 7. Overhead and Other Administrative Costs 0.0 15.0 15.0 8. Contingency 0.0 14.0 14.0 Subtotal (B) 0.0 100.0 100.0

Total 126.0 374.0 500.0

a Funded by the Japan Special Fund. b Procurement of photocopier, computers, printers, authorized software, and other required office equipment will follow ADB's Guidelines for Procurement through direct purchase procedure with at least three quotations. c Costs of consultants for workshops and for consultation meetings in the districts. d Including local institution contract and other surveys and rapid appraisals, as required. e Including office supplies. f Including accommodation and utilities for consultants' main offices and other offices in the districts. g Includes all costs of workshop facilitation, accommodation, materials, and working meals; travel, accommodation, and subsistence for nongovernment participants to the workshops, meetings, and consultations. Source: Asian Development Bank estimates.

10 Appendix 4

OUTLINE TERMS OF REFERENCE FOR CONSULTANTS

A. Overall Responsibilities

1. The technical assistance (TA) will be led by an international economist with experience working in poverty-focused rural development projects, preferably in Pakistan. The team leader/economist will lead and coordinate all activities of the TA and act as the primary contact between the TA team and the provincial and Federal governments, the Executing Agency and the district governments. The team leader will be responsible for timely production of TA outputs of a standard acceptable to the Government and the Asian Development Bank (ADB).

2. The team leader will (i) ensure participatory gender-sensitive conduct of TA in the context of government policy and ADB’s policies and guidelines, (ii) review and identify opportunities for linkage between the proposed project and other planned and/or ongoing interventions, and (iii) assess Punjab government counterpart funding for the project.

3. The TA team will include domestic specialists in social/gender issues, agricultural economics, engineering (roads, water storage, and conveyance structures), watershed management, animal husbandry/livestock, institutions and governance, information technology/data base management and geographic information systems (GIS), and environmental impact assessment.

B. Background Review

4. The consultants will (i) collect, collate, and review all data, published information, and other documentation including studies (cluster survey and others), surveys, and statistics relating to (a) the barani districts; and (b) government policies and plans and both previous and ongoing projects for poverty reduction; area, rural, and agricultural development; microfinance; small and microenterprise promotion; as well as completion and performance audit reports; and (ii) prepare lessons learned analyses.

C. Livelihood Analysis

5. The purpose of the livelihood analysis will be to improve the design and implementation of poverty reduction efforts. Poverty studies and sector and thematic papers will be prepared based on desk reviews and gap analyses, supplemented where needed by fieldwork.

1. Poverty Studies

6. Poverty studies will include estimates of poverty levels and the characteristics of poverty based on a small sample household income and expenditure survey in which the affordability and willingness to pay for public sector services, including extension services, may also be explored; participatory poverty assessments on a gender-disaggregated basis, including asset profiles, access to resources, wealth and well-being ranking, livelihood problem trees, ranking matrixes; profiles of poor households through in-depth household level interviews; and area; and gender-specific poverty-targeting indicators.

2. Sector and Thematic Papers

7. Sector and thematic papers will be undertaken in a variety of fields to find out about livelihoods and improve the design and implementation of poverty reduction efforts.

Appendix 4 11

(i) District budgets and development program: analysis of annual budgets and expenditure patterns of the district governments, brief analysis of development allocations and schemes of the districts and unions including citizen community boards (CCBs). (ii) Employment and Incomes: sources and patterns of employment and income; potential opportunities and constraints in employment promotion in the formal and informal sectors; interventions to facilitate and promote employment and income generation; potential human resource development, including technical and vocational education with particular focus on women and on nonfunctional literacy. (iii) Natural Resource System: management methods for natural resources and the current understanding among the poor, government agencies, and other stakeholders of the issues involved; soil and water conservation practices; management of common property and resources including pastures, rangeland, and watersheds; land and water use and rights; traditional and contemporary land tenure arrangements and related issues affecting resource use; screen whether proposed interventions cause loss of land, income, or other assets and initiate if necessary resettlement planning measures in accordance with ADB’s Handbook on Resettlement; identify poverty-focused interventions that could be recommended for inclusion in the project, taking into account environmental considerations. (iv) Agriculture: review and assess existing farming systems and potential for high- value crop production, including status of technology in crop production, handling, storage, grading, quality control, and transport of harvested material, and make recommendations; critically assess underlying factors of an effective marketing system and make recommendations for realistic interventions for fairer trading mechanisms and in management and organization; and review existing extension structures and services and their effectiveness, and recommend improvements making use of existing public and private sector services in the area. (v) Livestock: assess livestock and poultry development activities and practices, fodder production and availability, and feed requirements and sources; identify major constraints and technical possibilities to improve production and animal health; and make recommendations for improvements using existing public and private extension services in the area. (vi) Social Structures, Systems, and Conditions: social, political, and economic relations of associations; inequality, local elites, patronage, and group organization; gender relations, asset ownership by women, and titling; assessment of the effect of land, water, grazing, and other customary institutional practices and of vested interests on access to resources, particularly vis-à-vis women; conflict over resources; patterns of population settlement; literacy, education, health, hygiene, and sanitation levels with focus on women; communities and formal institutions (government, private, civil society organizations) and the strengths of institutions, their role and scope, provision of services, including coverage, quality, and customers’ satisfaction with services; make recommendations for social and community mobilization and linkages with CCBs; and organization and participatory decision making including voice of the poor in local government decisions. (vii) Road Network: review existing farm-to-market and other rural access road network including proposed plans/schemes of the district government and other agencies; identify links not covered under the proposed schemes; review methods, materials, design and construction standards, and costs; critically examine repair and maintenance practices and costs; make recommendations for inclusion of priority linkages in the project in consultation with the district governments under assured operation and maintenance (O&M) arrangements.

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(viii) Environmental Impact Assessment: collect from available sources and reconnaissance visits; compile and review relevant environmental data, including on agriculture, livestock, inland fisheries, forest/rangelands, and agrochemical use; and delineate environmental criteria and guidelines to be followed as part of selection criteria considering national and provincial legislation and strategies. (ix) Nongovernment Organizations: identification, description, and assessment of international, national, and local nongovernment organizations (NGOs) active in the project districts, including participatory assessment of outreach to the different social strata and to women, and of a potential role during project implementation; make recommendations for representation of NGOs, community-based organizations (CBOs), and other civil society organizations in relevant project design workshops; and assessment of NGO needs for capacity building and respective cost estimates. (x) Private sector: the role of the private sector particularly the potential, opportunities, constraints, and market failure in small and micro entrepreneurship and initiative; the pattern of public and private sector investment and the role and importance of government interventions and involvement in regulation and facilitation of investment; keeping in view possibilities of linkages with ongoing initiatives such as ADB Microfinance Sector Development Program (Khushhalibank), ADB-TA Agribusiness Development, and ADB-TA SME Sector Development; make recommendations for the role of the private sector in the area and possible activities and interventions that may be included in the project to further the objective of poverty reduction and sustainable livelihoods; indicate mechanisms that allow for the establishment of partnerships between government agencies and the private sector in development activities. (xi) Institutional Assessment: review institutional arrangements of the provincial and district governments at all levels and their roles, responsibilities, staffing, capacities, and capabilities; monitoring of performance and financial reporting; internal control mechanisms and accountability; procurement procedures; government outreach, linkages, and cooperation with the nongovernment sector; make recommendations for institutional strengthening and propose an action plan and framework; and take into account data collection and analyses done in the framework of the ADB Punjab Resource Management Program, currently under preparation.

3. Digital Atlas

8. A digital atlas comprised of geospatial and socioeconomic indicators for the project districts will be developed to support decisionmaking, planning, and project monitoring. Initially the atlas will comprise data and information collected and generated during the TA, including poverty and sector and thematic papers.

4. Consultative Meetings and Presentations

9. Initial presentation of the work of the consultants will be made to the district governments. Consultations in the form of participatory workshops will be held in the project area with district governments, other local governments, civil society, the local private sector, and other stakeholders. The findings of the livelihood analysis and the broad direction of the project will be presented in the consultations. The presentation will include GIS-based presentation of basic data, studies, surveys, and findings as a digital atlas.

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5. Preliminary Recommendations

10. On the basis of the livelihood analysis carried out, the consultants will make recommendations, in consultation with the district governments and with stakeholder participation on (i) “best-bet,” high payoff prioritized entry points that will have significant impact on the livelihoods of the poor for inclusion in the project; (ii) poverty targeting indicators and criteria for project activities and interventions; and (iii) broad strategy for project implementation. Specifically, links across sectors, between field and policy levels, between the public and private sectors, between various government implementing agencies, and between rural and urban will be identified and considered to provide a basis for the design of appropriately sequenced interventions.

D. Feasibility Study and Project Preparation

11. The consultants, in close collaboration with the district governments, will complete the detailed draft final report containing the feasibility and design of the project. The project framework outlined in the preliminary recommendations and the consultative meetings and agreed upon with the Government will be finalized and any additional comments or suggestions from the Government and ADB incorporated. The consultants will do the following:

(i) Describe the project scope (i.e., inputs, components/activities, outputs, and underlying technical assumptions) and define project areas and target groups. (ii) Prepare detailed cost estimates for the project using the COSTAB computer software and prepare a financing plan. (iii) Prepare model farm enterprise budgets using the FARMOD computer software; clearly identify project beneficiaries by income groups, and indicate the likely distribution of project benefits among the various groups. In addition to farm producers, financial analysis will be undertaken for other groups benefiting from project investment. Based on the detailed social and gender analysis outlined in ADB's Handbook for Poverty and Social Analysis, assess the likely socioeconomic impact of the project on vulnerable groups and recommend measures to enhance poverty impact. (iv) Assess the likely fiscal impact of the project, with the goal of minimizing government expenditure and increasing beneficiary contributions to the selection, design, implementation and O&M of project investments. (v) Conduct detailed financial and economic analyses of selected core and representative subprojects for each proposed component using ADB's Guidelines for the Economic Analysis of Projects , including internal rates of return. Discuss elements of subsidies for economic and project activities and address issues of sustainability and cost recovery (where relevant) in the context of willingness and ability of the beneficiaries to pay and contribute to costs of the project. (vi) Conduct sensitivity and risk analysis as appropriate. (vii) Indicate environmental impacts of the project and recommend mitigation and remedial measures and costs. Prepare an initial environmental examination (IEE) and summary IEE in accordance with ADB's Environmental Guidelines for Selected Agricultural and Natural Resource Development Projects . (viii) Finalize a gender action plan for the proposed project in the light of the recommendations of the Gender Reform Program (TA-3832) and in accordance with ADB policies and guidelines. (ix) Outline the design and support for an effective project performance management system, clearly identifying monitoring indicators and meeting ADB requirements,

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including adequate quantifiable time-bound monitoring indicators and relevant baseline data. (x) Describe strategies for institutional strengthening and detail the mechanisms/modalities for the incorporation of a participatory planning process in management and implementation, clearly indicating how the district government will adapt to a role as a facilitator and regulator of development, in line with devolution. (xi) Assess and make recommendations on methods and arrangements for implementation of project components and subcomponents to be aligned with and supportive of devolution, including procurement; propose an organizational framework and staffing for project review and coordination at the provincial level and liaison with the district government; and for project management including planning, monitoring, and reporting by the district government; give detailed recommendations for support in project implementation through consultants and NGO/CBOs, including their detailed terms of reference. (xii) Propose a training program outlining training requirements in various subdisciplines and operations, the number of trainees, procedures for selection of trainees, training venues and durations, and costs of training; recommend ways to promote exchange of experience through study visits and information sharing among various initiatives (such as the Swiss Agency for Development and Cooperation-supported activities in natural resource management in the North West Frontier Province and the Northern Areas). (xiii) Prepare an overall implementation schedule of the various project components with supporting GANTT charts.

E. Reporting Requirements

12. The consultants will submit the following reports to the Government and ADB:

(i) inception report within 4 weeks of the start of the TA, outlining the work plan including detailed design and methodology for the livelihood analysis, particularly the poverty studies; and preliminary findings from the review of documentation and experiences from previous and ongoing projects; (ii) interim report containing background review; livelihood analysis in the least developed and other districts (Appendix 2, Table 2); an initial digital atlas; report on consultation meetings and presentations to district government and stakeholders; and basic design of interventions in selected areas not covered within districts with previous or ongoing barani projects (Appendix 2, Table 1) to be submitted within 12 weeks of the commencement of the TA; (iii) draft final report containing all work undertaken under the TA at the end of the fifth month, 10 days before the third tripartite meeting; the draft final report will contain an executive summary in the form of an ADB report and recommendation to the President (together with specified appendixes); and (iv) final report to be submitted within 1 month after the Government and ADB have provided comments on the draft final report.