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Islamic Republic of Pakistan AJK Community Development Programme – II (AJKCDP2) Final Project Design Report

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Islamic Republic of Pakistan AJK Community Development Programme – II (AJKCDP2) Final Project Design Report Islamic Republic of Pakistan AJK Community Development Programme – II (AJKCDP2) Final project design report Main report and appendices Document Date: 2-Oct 2017 Project No. 2000001466 Report No: 4568-PK Asia and the Pacific Division Programme Management Department Islamic Republic of Pakistan AJK Community Development Programme – II (AJKCDP2) Final project design report Contents Currency equivalents iii Weights and measures iii Abbreviations and acronyms iv Map of the programme area vi Executive Summary vii Logical Framework xiv I. Strategic context and rationale 1 A. Country and rural development context 1 B. Rationale 6 II. Programme description 7 A. Programme area and target group 7 B. Development objective and impact indicators 9 C. Outcomes/Components 11 D. Lessons learned and adherence to IFAD policies and the SECAP 19 III. Programme implementation 21 A. Approach 21 B. Organizational framework 23 C. Planning, M&E, learning and knowledge management 25 D. Financial management, procurement and governance 27 E. Supervision 29 F. Risk identification and mitigation 30 IV. Progamme costs, financing, benefits and sustainability 31 A. Programme costs 31 B. Programme financing 31 C. Summary benefits and economic analysis 32 D. Sustainability 33 i Islamic Republic of Pakistan AJK Community Development Programme – II (AJKCDP2) Final project design report Appendices Appendix 1: Country and rural context background 35 Appendix 2: Poverty, targeting and gender 45 Appendix 3: Country performance and lessons learned 69 Appendix 4: Detailed programme description 73 Appendix 5: Institutional aspects and implementation arrangements 99 Appendix 6: Planning, M&E and learning and knowledge management 115 Appendix 7: Financial management and disbursement arrangements 127 Appendix 8: Procurement 137 Appendix 9: Programme cost and financing 141 Appendix 10: Economic and Financial Analysis 155 Appendix 11: Draft programme implementation manual 165 Appendix 12: Compliance with IFAD policies 167 Appendix 13: Contents of the Project Life File 193 ii Islamic Republic of Pakistan AJK Community Development Programme – II (AJKCDP2) Final project design report Currency equivalents Currency Unit = Pak Rs. US$1.0 = 107 Pak Rs. Weights and measures 1 kilogram = 1000 g 1 000 kg = 2.204 lb. 1 kilometre (km) = 0.62 mile 1 metre = 1.09 yards 1 square metre = 10.76 square feet 1 acre = 0.405 hectare 1 hectare = 2.47 acres iii Islamic Republic of Pakistan AJK Community Development Programme – II (AJKCDP2) Final project design report Abbreviations and acronyms ADB Asian Development Bank AG Auditor General of Pakistan AJK Azad Jammu & Kashmir AJKCDP Azad Jammu and Kashmir Community Development Project AJKRSP Azad Jammu & Kashmir Rural Support Organization AWPB Annual Work Plan & Budget CDDU Community Driven Development Unit CO Community Organization COSOP Country Strategic Opportunities Programme CPE Country Program Evaluation CPI Community Physical Infrastructure CPMT Country Programme Management Team DCC District Coordination Committee DPO District Planning Officer EIRR Economic Internal Rate of Return ETI, GB Economic Transformation Initiative, Gilgit-Baltistan FAO Food and Agriculture Organization of UN GDP Gross Domestic Product GB Gilgit-Baltistan GLLSP Gwadar-Lasbella Livelihoods Support Project GoAJK Government of AJK GoP Government of Pakistan ICO IFAD In-Country Office IFAD International Fund for Agricultural Development KM Knowledge Management LGRD Local Government & Rural Development Department LS&DD Livestock and Dairy Development Department LSO Local Support Organization MDG Millennium Development Goals MoU Memorandum of Understanding MTR Mid-Term Review M&E Monitoring & Evaluation NGO Non-Government Organization NPGP National Poverty Graduation Programme NRSP National Rural Support Programme PDD Planning & Development Department PC-1 Planning Commission Project Proforma1 PCR Project Completion Report PIM Programme Implementation Manual PPAF Pakistan Poverty Alleviation Fund PSC Project Steering Committee PWD Public Works Department QA Quality Assurance QE Quality Enhancement SDG Sustainable Development Goals SMP Social Mobilization Partner SOE Statement of Expenditure SPPAP Southern Punjab Poverty Alleviation Project ToR Terms of Reference UC Union Council (Lowest tier in local Government system in Pakistan) USAID United States Agency for International Development UNDP United Nations Development Programme VO Village Organization WB World Bank iv Islamic Republic of Pakistan AJK Community Development Programme – II (AJKCDP2) Final project design report WFP World Food Programme of UN WO Women Organization v Islamic Republic of Pakistan AJK Community Development Programme – II (AJKCDP2) Final project design report Map of the project area IFAD maps vi Islamic Republic of Pakistan AJK Community Development Programme – II (AJKCDP2) Final project design report Executive Summary1 1. Pakistan is the 6th most populous country in the world (with a population of 188.9 million), 26th largest economy with an estimated GDP of USD 270 billion and 36th largest country in terms of area (881,913 sqm). Pakistan is a lower middle income country, with an average income per capita of USD 1,512. The services sector (59%) is the largest contributor to the economy, followed by agriculture (21%) and industry (20%). Despite only 21% share, the agriculture sector employs 44% of the national work force. While Pakistan has important strategic endowments and development potential, governance and security challenges over the last decade have significantly limited the country's potential for growth. Following subdued growth during the period 2008-2013 (averaging 3 percent), a slump in international oil prices and fast-growing remittances has helped GDP to grow by 4.2 percent in 2015, and to reach 4.5 percent in 2016. Despite these gains, Pakistan’s low human development indicators continue to undermine its labor force productivity and true economic growth potential. Pakistan ranks 147 out of 188 countries in the 2015 Human Development Index (HDI), and its performance on most MDG targets including education, gender, health, nutrition, infant mortality remained below target. 2. With respect to poverty reduction, Pakistan has made substantial and steady progress. Despite the Government's recent adoption of a revised calorie-based poverty line (from Rs.2,350/adult/month to Rs.3,030/adult/month), the poverty rate has declined from 64.3% in 2001 to 30% by 2014. The 30% of the population defined as poor represent 59 million people, though an additional 20 million are declared vulnerable. Growth incidence curves also illustrate the pro-poor nature of Pakistan’s growth, with consumption of the poorest growing faster than mean consumption. 3. Poverty is however, more acute in rural areas (54.6%) as compared to urban areas (9.3%), and large disparities exist across provinces and within provinces. In general, rural poverty is an outcome of multiple structural and social factors including highly skewed land ownership and landlessness, a pro-urban bias in social and economic sector investments, high illiteracy rates among youth (32%), lack of skills among the productive-age poor (only 6% of young have technical skills) and class and gender-based factors. In 2008, the Government of Pakistan (GoP) carried out a nationwide poverty survey for the purposes of establishing a national well-being registry to target the most vulnerable, represented by the 'National Poverty Scorecard', ranking households on a scale from 0 to 100. Per the registry definitions, the corresponding IFAD target groups are households within the band scale of 0 to 34, which represents approximately 97 million people in total. 4. The concept of rural development in Pakistan has changed significantly during the last three decades. From an earlier focus on agriculture development, the emphasis is now on more holistic socio-economic development. Due to a lack of continuity of local government systems, national and regional Rural Support Programmes (RSPs) and the Pakistan Poverty Alleviation Fund (PPAF) have, since the 1990s, emerged as effective intermediaries for pro-poor participatory rural development. The RSP model, first piloted by the Agha Khan Rural Support Programme (AKRSP), has been replicated throughout Pakistan with support of Government and development partners alike. The model promotes three tiers of organization: (i) Community Organizations (CO) (ii) Village Organizations (VO); and (iii) Local Support Organizations (LSO). However, the RSP sponsored community-driven development (CDD) structures largely remain project and programme specific. They do not have a “by right’ access to regular government development resources. 5. The Azad State of Jammu & Kashmir (AJK) has an area of 13,297 square kilometers, and an estimated population of 4.4 million. Small landholdings and limited irrigation facilities has limited local agricultural production. Approximately 88% (or 383,800) of AJK households are rural, with very small 1 Mission composition: Mr. Hubert Boirard, CPM; Mr. Qaim Shah, Senior CPO; Mr. Rab Nawaz, Institutions, Management and Poverty Specialist; Ms. Wanaporn Yangyuentham, M&E Specialist; Ms. Tamar a Lampe, Programme Management Specialist; Mr. Aziz Al-Athwari, Finance Officer; Ms. Anta Sow, Financial Management Specialist. vii Islamic Republic of Pakistan AJK Community Development Programme – II (AJKCDP2) Final project design report average arable landholdings (0.9 ha/household). Furthermore, AJK comprises approximately
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