Sindh Growth and Rural Revitalization Program (Subprogram 2) (RRP PAK 41545-02)

DEVELOPMENT COORDINATION

A. Major Development Partners: Strategic Foci and Key Activities

1. The Sindh Growth and Rural Revitalization Program Subprogram 2 takes a program- based approach and promotes use of local systems in line with Paris Declaration for aid effectiveness. However, realizing the need for improvement in the systems, the program is assisting the government in improving its public financial management (PFM) systems for efficacy in public investments and greater transparency in public procurement. It is in line with development targets of the Asian Development Bank (ADB) in Pakistan, supports the government’s development agenda, and develops synergies with other multilateral and bilateral aid agencies active in Sindh, such as the Japan International Cooperation Agency, the United States Agency for International Development (USAID), and the World Bank.

2. The table below summarizes ongoing development projects, and assists in identifying areas that require further attention.

Major Development Partners Development Sectors and Themes Partner Project Name Duration Amount Water supply and other Asian Development Sindh Cities 2007–2015 $405.8 million municipal infrastructure Bank Improvement Program and services Private sector development, governance Agriculture and natural Asian Development Sindh Coastal 2008–2013 $36 million resources Bank Community Economic growth, social Development Project development, environmental sustainability Education European Union Sindh Education 2007–2010 €39 million Governance, capacity Reform development Transport, and JICA Sindh Rural Roads 2008–2013 ¥9,160 million information and Construction Project communication technology Economic growth, regional cooperation and integration Public sector USAID Districts That Work 2006–2010 $26 million management Program for institutional Governance, capacity development and development capacity building Education USAID Links to Learning: 2007–2012 $90 million Governance, capacity Education Support to development Pakistan (ED-LINKS) project Health and social USAID Pakistan Initiative for 2004–2010 $92.8 million protection Mothers and Newborns Social development, Project capacity development Public sector USAID Pakistan Legislative 2005–2010 $16.8 million management Strengthening Project Governance 2

Finance USAID Developing financial 2007–2013 $11.5 million Economic growth services for communities without access to credit Education World Bank Sindh Education Sector 2007–2010 $300 million Governance, capacity Reform Program development Multisector World Bank Second Poverty 2003–2010 $368 million Economic growth, social Alleviation Fund Project development Agriculture and natural World Bank Sindh On-Farm Water 2004–2008 $84.7 million resources Management Project: Economic growth, The Sindh On-Farm environmental Water Management sustainability, capacity Project (2004–2008) development Agriculture and natural World Bank Sindh Water Sector 2007–2013 $175 million resources Improvement Project Economic growth, Phase 1: environmental Second Partnership for sustainability, capacity Polio Eradication development Project ADB = Asian Development Bank; ED-LINKS = Education Support to Pakistan; JICA = Japan International Cooperation Agency; USAID = United States Agency for International Development. Note: This table includes ongoing key development support programs in Sindh. Source: Asian Development Bank consultations with development partners.

B. Institutional Arrangements and Processes for Development Coordination

3. Institutional arrangements for development coordination were initiated at the federal level, where mapping of donor interventions has been identified as a vital component of the PFM strategy being developed for the Government of Pakistan. The working group—comprising ADB, the Department for International Development of the United Kingdom, the European Commission, USAID, and the World Bank—has held regular meetings to coordinate development interventions for Pakistan. For Sindh, the provincial public expenditure and financial accountability (PEFA) assessment was conducted jointly by key development partners, with ADB heading the assessment exercise; the PEFA results informed reform decisions and guided the division of labor among development partners to avoid duplication of efforts. For instance, ADB has supported the Government of Sindh (GoS) in developing a medium-term fiscal framework that will guide the entire fiscal operations of the government and World Bank has provided support for developing a medium-term budgetary framework. Similarly, the scope of the medium-term budgetary framework (introduced under the World Bank's Education Sector Reform Program) has been expanded under the program to include the agriculture sector, USAID has been developing the capacity of legislators for budget processes, and ADB is assisting the provincial public accounts committee to improve legislative oversight of public investments.

C. Achievements and Issues

4. The program has redefined the role of the public sector in management of agriculture wholesale markets by facilitating amendments to 71 year-old legislation, and opened wholesale markets to the private sector. These amendments will reduce the role of middleman, as price determination will take place through free market mechanisms that benefit both growers and consumers. A new law to replace the amended version is under consideration, which will result in corporatization of agriculture markets to introduce best practices in running agriculture 3 wholesale markets. Issues remain with regard to the new regulatory role, and these will be addressed through capacity building of the public sector.

5. To promote public private partnerships (PPPs), GoS has enacted a PPP Law, formed a PPP policy board headed by the chief minister, and established PPP and risk management units under subprogram 2. A project pipeline for the transport sector will be developed. The PPP initiative will have a positive impact in terms of addressing infrastructure needs in the province, introducing private sector efficiencies, and creating fiscal space for social sector expenditure.

6. To improve public investments GoS introduced 3-year estimates in its development portfolio, to transition from annual incremental budgeting to a medium-term budgetary framework. GoS adopted medium-term budgeting in two departments; implementation is starting in FY2011, and it will be expanded to four line departments in FY2012.

7. Gender mainstreaming is a cross-cutting theme in the three core policy areas of subprogram 2. The gender action plan for the program details how gender mainstreaming will be incorporated into program design and implementation.

D. Summary and Recommendations

8. Subprogram 2 is closely aligned with and contributes towards development outcomes of the governments of Pakistan and Sindh, as well as ADB's country partnership strategy (2009– 2013).1 It builds on the work done under subprogram 1 and further develops synergies with the work of other development partners in Pakistan. In addition, a more structured government-led development coordination mechanism may have great added value in future partnerships for the development of Sindh.

1 ADB. 2009. Country Partnership Strategy: Pakistan, 2009-2013. Manila.