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,