I. Background to NWFP's Development Program
1. The present Mutahidda-Majlis-e-Amal (MMA) government of NWFP that took office in December 2002, won elections on promises of goals that were similar to the thrust of the Provincial Reform Program 2001-04 adopted by the previous government in its closing days. Hence the MMA government quickly adopted the Provincial Reform Program, and the detailed reform program articulated in the World Bank's SAC1. Despite being adopted earlier, the implementation of the PRP essentially started in 2003 after the present elected government came into office.
2. The foundations of the 2001-04 PRP were based on five pillars: (i) fiscal reforms; (ii) public financial management reforms, (iii) acceleration of human development and improvement of service delivery, (iv) governance reforms and (v) private sector development to accelerate economic growth.
3. Although NWFP has made progress towards the MDGs much remains to achieve these outcomes. The most recent data on outcomes is for 2001/02. It is expected that more recent data for the period of the PRP, would show improvements in these indicators. Moreover progress in reform implementation and improved input and intermediate indicators give a strong indication that the underlying progress is substantial.
4. The Government of NWFP has made substantial efforts in the last few years to improve the lives of its citizens. Progress has not been uniform and certain reforms have taken longer than expected. The GoNWFP has taken significant steps forward in a range of reform areas, such as in fiscal, public financial management and service delivery areas. Significant progress has also been made in governance and civil service reforms and in facilitating growth and private sector development. But notwithstanding the progress made, there is no doubt according to the government, that because of the low starting point, NWFP still faces huge challenges and needs to continue with the direction and pace of reforms for poverty reduction and human development.
5. The government has maintained a sustainable fiscal position. The debt service burden has declined from 2.5 percent of PGDP in FY02 to 1.3 percent in FY05, public debt as a ratio to PGDP has declined to 12 percent in FY05, and is projected to decline to 9 percent over the medium term. The government has increased fiscal space through early retirement of expensive debt and by sustaining own provincial revenue collection to 0.8 percent of PGDP. The government has improved expenditure composition by using the fiscal space for high priority spending. The share of social spending reached 38 percent of total expenditures in FY03. This happened while institutional reforms increased the effectiveness of spending. Current expenditures came down to 81 percent of total expenditures from 89 percent.
6. Several tax administration measures were also taken. The GoNWFP has also instituted several reforms in the preparation, processing, and execution of the budget. NWFP was the first province to use a needs-based formula for budgetary transfers to the districts starting in FY02.
7. Delays in the completion of the proposed NFC Award and settlement of the hydel profits dispute restricted the fiscal options of the province, forced the government to adopt austere social development programmes and ignore maintenance and development of physical infrastructure which affected private sector growth and employment with adverse consequences for poverty in the province.
Public Financial Management and Accountability Reforms
The GoNWFP has satisfactorily implemented the key elements of the public financial improvement plan, including: enhanced reconciliations, reduction in suspense accounts, progressive closure of off-budget accounts, up-gradation of DAOs, embracing and taking advantage of PIFRA computerization, appointment of the Provincial Financial Coordinator (PFC) as the focal person for FM reforms, operationalization of an effective Parliamentary Public Accounts Committee (PAC), and creation of DG District Audits.
8. A number of institutional reforms have been undertaken to improve public financial accountability; adopted a Provincial Financial Accountability Assessment (PFAA) and established a Public Accounts Committee (PAC). Following the passing of a Procurement Ordinance in May 2002, the GoNWFP passed a new Procurement Law for goods, works and services; standard bidding documents for goods, works and services have been adopted.
Human Development and Service Delivery Reforms
(a) Improving access and gender disparity in education
9. The present Government, under the Education Sector Reform Program, has taken many new initiatives: it has exempted fees in government secondary schools, and provided free textbooks in government primary schools (first to girls then to boys). There are plans to make education compulsory up to class 8. As part of the Institutional Reforms Program in the Education Sector, a large number of girls' schools were provided basic facilities.
(b) Improving quality of education
10. The government created a district cadre of education staff after Devolution and has recently announced new recruitment rules to reduce teacher absenteeism. Around 2,350 teachers were recruited (including 1500 female teachers) in FY03 to overcome staff shortages in girls schools and another 4,000 contract posts were created in FY04 and the recruitment process is being completed. Separate teaching and management cadres were notified in September 2003.
(c) Increase significantly the budgetary allocation for education
11. Education spending registered a rapid increase. Expenditures were reallocated toward primary and secondary education and vocational training (including teacher training). The GoNWFP overshot the target of providing development funds for girls' schools. User charges from higher education were increased.
(d) Encouraging public-private partnerships and community involvement
12. The Government initiated a number of measures to encourage the private sector, such as use of unoccupied government buildings for establishing schools; allowed the private sector to publish and print textbooks; established the Frontier Education Foundation (FEF) and an Elementary Education Foundation (EEF); strengthened PTAs in almost all 20,000 primary schools and started providing them IM&R funds. The government has also deregulated the publication of textbooks for grades 1-12.
(e) Strengthening monitoring and supervisory mechanisms
13. The GoNWFP strengthened monitoring of teacher attendance by taking actions on the monthly reports filed by the Executive Development Officers (Education). It will pilot a more expanded role for the PTAs in monitoring teacher attendance and the Education Management Information System (EMIS) has been devolved to the district level. Information technology (IT) tools are increasingly being used to improve M&E. A Website has been set up for the Directorate of Schools and Literacy (DoSL), and all district departments have been linked with e-mail.
(f) Higher education reforms
The government will initiate a study on college education to assess quality, access & market linkages. The Frontier Education Foundation (FEF) will be giving administration of its colleges to the private sector. The reform structure of the FEF will ensure autonomy & sustainable support to private sector education development. The policy of separating the teaching and management cadres is to be implemented.
(a) Strengthening Communicable Disease Control and Maternal Health Programs
14. The health sector reforms have implemented a number of programs such as expanding TB DOTS, increasing neonatal tetanus coverage, and improving access to family planning and primary health care services by the expansion of the LHW program. The immunization rate of children under two has increased to 73 percent. Hepatitis B vaccination has been introduced across the province with a reported coverage of 73 percent; neonatal tetanus campaigns completed in all high risk districts. The polio campaign is on track. The EPI program was approved.
(b) The Health Care and Hospital System Management Reforms
15. The Department of Health was restructured in line with the devolution initiative and progress was made to build capacity of District Managers. A Health Sector Research and Reform unit was established. Four tertiary hospitals have been given financial and administrative autonomy. Trained nurses have already been recruited, and more posts are to be filled. Rationalization and standardization of District Headquarters Hospitals have been initiated in 22 districts. Facility specific contracts have been introduced to reduce absenteeism. Monitoring and evaluation has started to pick up with third party validation survey contracted out, and efforts made to strengthen Health Management Information system. The Department continues to promote partnerships with the private and NGO sector.
(c) Increased Allocations for the Health Sector
16. The health sector expenditures have continued to increase rapidly in recent years in line with the MTBF. Overall (actual) health spending was 7 percent of total provincial spending in FY03 and 40% higher than FY02 spending.
17. Data on health outcomes for 2002/03 are not yet available. However, there are indications that health outcomes may be improving in NWFP.
18. During the last three years, budgetary allocations to this sector have increased from Rs.30 million in 2002/03 to Rs.224 million in 2005/06. In July 2003, the GoNWFP launched the Rural Water Supply and Sanitation Project (RWSSP), to improve services through institutional capacity building of TMAs and installing over 5,500 low cost, community-managed schemes. Appointments have been made in PHED for the smooth working of a regulatory body in the urban water sector at the provincial level. The province had started the community participatory development program utilizing the services of Vocational Development Organizations (VDOs) successfully. The GoNWFP has simultaneously launched TMA capacity - building projects.
19. The provincial government is trying to expand its capacity to implement National Environmental Quality Standard (NEQS). The GoNWFP had developed pilot projects to control air, noise and industrial pollution.
20. Forest coverage has increased from 17 percent in 2002/03 to 17.6 percent in 2004/05. Budgetary allocations for forestry under ADP increased from Rs. 140 million in 2002/03 to Rs. 164 million in 2004/05. GoNWFP had created a Forest Development Fund (FDF) in June 2002, to manage forest resources including their generation and other development activities.
21. The Government has lifted the freeze on recruitment to vacant positions other than teachers, health personnel and police (in place for the past 7 years), primarily because it had become a bottleneck for service delivery with an expanding population, the impact on the wage bill can be accommodated within a sustainable fiscal framework.
22. The government's vision on maintaining merit in public sector employment is also visible in practice. Initial steps have been taken to lessen recruitment delays, increase tenure, and respond to actuarial liabilities. Complaints of excessive and out-of-turn postings and transfers within the bureaucracy have been addressed.
23. The province took the lead in implementing administrative and operational aspects of devolution of power including fully devolving 12 Provincial Departments to the districts, and placing 200,000 out of 280,000 provincial employees in districts. Other measures taken to institute administrative devolution
24. As many as 24 Departments of the Provincial Government were identified either for staff reduction, amalgamation or closure. In result of their re-organization the number of Departments was reduced from 46 to 23, and a surplus pool of 6000 staff members created, most of whom have now been absorbed in new vacancies in the Districts. The policy of recruiting government officials against regular posts on 3- year contracts rather than as permanent civil servants is being revised and all Government officials who had been appointed against regular posts have been declared regular civil servants.
25. Estacode rules governing the management of civil servants have been revised and simplified. The ACR Form has also been simplified to make reporting easier, procedure prescribed to make these timely and definite. An amendment in the administrative rules was made to strengthen the Public Service Commission and make it autonomous.
26. The records of 170,000 out of 280,000 government officials has been computerized, together with the records of 77,000 out of 99,000 civil pensioners and ready for periodic updating.
27. A pilot project Peshawar and Kohat district allocated government resources through the system of Performance Budgeting in the Health, Education and Agriculture Departments in the first phase, and the project is proposed to be extended to eight other districts in the second phase.
Private Sector Development and Growth Oriented Reforms
28. The Government has formulated a strategy for economic development based on sound principles. Meanwhile the Government has moved on the following fronts: It has reduced impediments to doing business and improved the business and investment climate by improving the law and order situation and by reducing the number of government inspections. It has divested 12 out of the 13 public sector units established by the Sarhad Development Authority (SDA); leased out or completed bidding process for lease of all remaining small hydel projects to the private sector; leased out one fourth of the 39 government mineral exploration and development industrial units; dissolved four autonomous bodies; and retrenched staff of autonomous bodies. It has integrated and merged government agencies dealing with industry and mining; and amended Mining Concessions Rules to allow for simplified procedures, entry of small-scale businesses and clear policies on mining in the Province.
29. It has, together with the private sector, initiated the development of mechanisms for ongoing dialogue between the Government and the private sector in order to address the issues, problem, constraints and opportunities that the private sector faces. It has increased public investments in infrastructure. It has also set in motion the process of reorganizing the technical and vocational training institutes to ensure a market demand-driven focus in training. Furthermore, it has developed an agricultural growth strategy, has created farm service centers in 24 districts and has increasingly put more emphasis on making credit available to SMEs and farmers from national and provincial institutions through targeted credit and micro-credit schemes.
30. The government now plans to reduce the ownership in Bank of Khyber (BoK) to 51% by December 2005. It has refocused the Sarhad Development Authority SDA, which primarily manages public-sector owned industrial estates, to investment facilitation.
While the PDP 2005/06-2007/08 was being prepared, a devastating earthquake struck parts of Pakistan and Azad Jammu and Kashmir on October 8, 2005. Four districts of NWFP in the north-east of the province were severely affected causing thousands of deaths and injuries as well as immense damage to the private and public property, infrastructure and social and Government organizations in the area. National and provincial efforts are underway with substantial international support to rescue those affected, provide immediate relief to survivors, and start the rehabilitation work in the affected areas. An assessment of the damage and needs is currently being made. The PDP does not address the needs of the rehabilitation and reconstruction work in the earthquake affected areas which requires a separate plan and resources.
Challenges and Constraints
The Government believes that development is a continuous process, and the reforms over the last three years have laid the foundation for continuing progress in the years ahead. Notwithstanding the progress made, because of the low starting point, NWFP still faces huge challenges and needs to continue with the direction and pace of reforms for poverty reduction and human development. Poverty in NWFP while lesser, is still widespread, especially in the rural areas. Disparity in incomes between NWFP and the rest of the country may have increased over recent years while NWFP could not benefit proportionately due to the low share of manufacturing in the provincial economy. Slow growth in economic activity is the main reason for the prevalence of poverty in NWFP. Invigorating the provincial economy is pivotal to creating employment opportunities, increasing incomes and reducing poverty. The locational disadvantage of NWFP vis-à-vis ports and major markets is one challenge the private sector has to confront in the development process.
The Government has formulated the Provincial Reform Programme II for 2005/06-2007/08 keeping in mind the continuing challenges facing the province. Accordingly the Government has adopted a four prong strategy to address the development challenge over the medium-term.
The Provincial Development Strategy 2005/06-2007/08
The PDP Strategy has four pillars:
- In order to reduce poverty and to raise the quality and standard of life of the people, the Government intends to accelerate human development through education and better health so that all people can benefit from and contribute to economic growth.
- In order to raise incomes and reduce poverty, the Government aims to increase opportunities for the people to seek employment in productive and sustainable economic activities by invigorating competitive private sector activities in the province.
- Recognising the existence of disparities in incomes and human development, the Government intends to address disparities in development across genders, the rural-urban divide and across regions, and to develop social safety nets for the most deprived in society.
- In view of the tight resource constraints facing the province, the Government intends to enhance the efficiency of public expenditure and improve social service delivery by improving governance and enhancing accountability.
The PDP is a continuation of the comprehensive medium-term reform programme that ended in 2004/05, extending many of the earlier programmes and it also includes many new initiatives, especially in the promotion of private sector activities and human development.
Pillars One and Two: Accelerating Human Development and Addressing Disparities
Education is pivotal to the government's medium-term development program. The main objectives in education are: (i) to improve access to primary education (enrolment) and raise its quality; (ii) to reduce gender and rural-urban disparities; and (iii) to expand capacity at the secondary school level for continuing education beyond primary level. These objectives are to be achieved through various programs.
i- Improving access and reducing gender disparity in education
The Provincial Government and the District Governments have prepared Education for All (EFA) Plans. To ensure 100% literacy and enrolment by year 2015 a total of Rs.100 billion will be required which is far greater than the current years' allocation. The gap will be met through internal and external donor resources.
Free education is provided in government schools up to class 10. In FY06, Rs. 100 million are being provided for supply of free textbooks to 300,000 students from KinderGarten to 10th grade. The program will be expanded to provide free textbooks to all students in government schools.
The Government has amended rules for primary teachers' recruitment to address absenteeism, recruiting on merit 75% from union councils, and the remaining 25% on district merit, and has approved rules for district based recruitment of secondary and middle school teachers as well. The Government will introduce new legislation so that for promotion purposes, educational services can be treated differently from other services.
The Government will further improve access to education by implementing a number of measures: increase the number of secondary schools by 5 percent; introduce a pilot stipend scheme for students in both public and private schools; provide missing facilities to the remaining secondary schools for females; subsidize secure travel arrangements for female teachers and students in remote areas and increase stipends for female students; and tailor interventions to the specific binding constraints that vary between districts including lack of transport access in remote areas.
ii- Improving quality of education
Teacher shortages are being addressed by district-based recruitment rules; the program for teacher rationalization, separation of teaching and management cadres, implementation of the teacher monitoring and communication system and provide full funding; continue the appointment of 4,000 teachers on school specific contracts against positions created in FY04; revise and update the Institutional Reform Program according to needs; continue with teacher training and expand the system of student assessments. Institutional and management reforms comprising bifurcation of the provincial education department into lower and higher level education have already been undertaken.
To improve management in education institutions, first, the district education managerial staff has been given needs based training in planning and management, and will continue at the Provincial Institute for Teacher Education. Detailed job descriptions, users' manuals, and compendiums of rules and policies have been prepared and distributed to the district governments. Secondly, the Government has notified a separate management cadre in the education sector and approved the rules for its establishment. Both the teaching and management cadres will be supported by strategic professional development plans and training. In FY06, the Government introduced a new system of recruitment which will shorten the entire recruitment process to just one month, for filling up of vacant posts.
The government will further strengthen the teacher training program to improve the quality of service. Twenty elementary colleges for teacher training have been restored to offer both pre-service and in-service training for male and female teachers separately. At present, about 100 high and higher secondary schools have computer laboratories set up under public private partnerships, and another 169 are being set up in all districts under a 50/50 shared project with the Federal Government.
Finally, the Government is also considering provision of additional resources for the katchi (or pre-primary) class, because strengthening of the provision of early childhood education is a key way of reducing dropouts as well as arresting the flow of child labor to the labor market.
iii- Improving monitoring of teacher attendance
To monitor schools in remote areas, the Government will increase funding for monitoring and reduce the number of schools assigned to each ADEO, to enable supervision more frequently. The Government intends to facilitate stronger involvement by parents and the local community through PTAs, to empower communities to recommend disciplinary actions other than the transfers of negligent teachers. The Government will also build the capacity and awareness of PTAs in all districts through targeted training programs. Funds are being distributed to PTAs for repair and maintenance on the basis of enrolment, and PTAs are being given more flexibility in the use of these funds. The Government will ensure school specific budgets for primary schools, and transparency of budget information to the public, in order to check leakages of school funds.
iv- Ensuring qualified teachers and improving school management
The process of appointment of all teachers is being streamlined to minimize recruitment periods from the current 6-9 months. The Government will offer substantial salary and training incentives in remote areas for female teachers, allay security concerns by subsidizing secure travel arrangements and provide security guards at the school as well as adequate school facilities. School management will be made accountable for poor performance, including for excessive absenteeism of staff.
v- Increase significantly the budgetary allocation for education
The increase in public spending on education has so far improved educational indicators marginally. Continued provision of MTBF programmed funding to the education sector, including for IM&R and EMIS, will be maintained.
vi- Encouraging public-private partnerships and community involvement
The private sector is being given representation in education committees including the Boards of Intermediate and Secondary Education (BISEs). The Provincial Education commission set up under the Shariat Act 2003 also has representation from private sector institutions. The BISEs have been notified as Regulatory Authorities for private schools. The Authorities will also supervise quality, school fees, teachers' salaries and parental concerns in private schools.
The Government has taken steps to improve private provision of education services by establishing two provincial education foundations, the Elementary Education Foundation (EEF), and the Frontier Education Foundation (FEF). Students from poor families are also assisted through provision of capped school vouchers, allowing them to attend private educational institutions at low cost.
The steps being taken by the Government to activate PTAs in middle and high schools with authority to monitor teacher attendance and to spend IM&R funds have already been noted in an earlier section. The Government will continue to expand public-private partnerships by using vacant government buildings, and operating evening classes. There will be a continuation of the textbook deregulation policy. Finally, the Government is considering contracting out the management of chosen public schools to an NGO for a management fee.
vii- Strengthening monitoring and supervisory mechanisms
The Institutional Reform Unit in the DoSL will be be made functional (staffing and budget allocation) to effectively monitor and evaluate the reforms. Baselines and targets need to be established.
A computerized system including a refined GIS will be developed to help policy makers see the big picture of the education system and assist in planning for the future. For monitoring purposes the whole province has been divided into 300 educational circles. Each circle has an average of 80 primary schools. Half of these circles are male and half are female circles. Each circle has a Circle Officer (or ADO) who task is to monitor the schools in his/her area. For each circle officer an adequate officer building is being constructed that will be equipped with phone, fax, computer and internet facilities. It is intended that the office also function as a resource pool for the local training for teachers.
viii- Education outcomes
While progress has been made in enrolment, the medium-term targets (85% overall GER and 84% GER for girls) will be achieved with a special enrolment increase campaign. A survey of all 3 million households in the Province, to assess the number of children attending school will be conducted.
Approval was given in early 2004 for a five year project to mainstream madrassah education by supporting approximately 8,000 madrassahs in the country. Government support will be provided to those madrassahs that integrate religious education with the standard curricula of formal education so that 0.7 - 1.5 million madrassah students receive formal education.
ix- Migration implications for education policy in NWFP
The province will increase significantly the education level of its workforce, both of potential migrant workers and of the work force that will remain and drive its economy. The college sub-sector will have a direct link to private employers in order to identify the set of qualifications that are in high demand in the provincial economy.
x- Higher education reform
In order to ensure the smooth running of the department, and to distribute the work load, the education department has been bifurcated into two separate administrative departments: Schools and Literacy Department, and Higher Education Departments, respectively. The government will initiate a study on college education to assess quality, access & market linkages. The Frontier Education Foundation (FEF) will be giving administration of its colleges to the private sector. The reform structure of the FEF will ensure autonomy & sustainable support to private sector education development. The policy of separating the teaching and management cadres is to be implemented.
Health Reform Programme
The government's strategy in the health sector is based on management and organizational reforms; programmatic reforms; and increasing financial allocations. The strategy aims to significantly improve health indicators in the province over the medium term by focusing on the following elements:
i- Strengthening Communicable Disease Control and Maternal Health Programs
In order to meet MDGs of 80% child immunization rates, the GoNWFP will continue emphasis on EPI. The government proposes to record immunization rates by gender to monitor the status of the gender gap. The government intends to achieve the target of 50% by FY06 for Tetanus Toxoid vaccination rate (2 doses) for pregnant women. LHWs are also being trained to take part in routine immunizations and seven districts have been identified for implementation of micro-intervention plans to strengthen routine immunizations.
ii- National Programme for Primary Health Care and Family Planning
The government will continue to train and deploy the newly recruited and in process LHWs during the next 3 years to meet the province wide target of 15,108 LHWs by FY08.
The government will make an assessment of maternal health, develop a medium term strategy and a monitoring framework. The Rural Health Project midwifery program will train 300 midwives and achieve maternal TT rate of 50 percent by end FY06. The government plans to include adolescent RH in the RH Project.
The government will strengthen Reproductive Health Services by training courses for LHWs and Training of Trainers (ToT). This program will help achieve the target of 40 percent Antenatal Care consultations by FY06 from the current ANC use of 21 percent.
The PRP target Contraceptive Prevalence Rate (CPR) is 40% by FY10, and 48% by FY15. The unmet contraceptive need is 35%, so the government intends to continue its emphasis on family planning.
TB DOTS coverage is to be made more effective and public private partnership strengthened; increasing case detection rate to 70% and success rate to 85% using LHWs as treatment observers. A provincial Reference TB Lab is proposed especially for multi-drug resistant strains.
The Roll Back Malaria Program will expand and improve service delivery ensuring prompt treatment within 24 hours, increasing preventive measures, promotion of treated bed nets and selective indoor residual spraying. A Provincial Laboratory is proposed in the Peshawar EDO's office for the next phase of the program. Malaria officers will be revived.
The HIV/AIDS Program will expand coverage and continue working with the NWFP AIDS consortium, collecting monthly and quarterly surveillance reports, and registration of blood banks, safe blood banking and scrutiny of blood banks is to be strengthened. Mapping for high risk groups is to be continued, and treatment for patients at the Hayatabad Medical Complex improved. Use of Iodized Salt is to increase from 22% to 40% by the end of FY06. Working with NGOs and the private sector is to be further enhanced in all the above areas.
Health Care and Hospital System Management
The government plans to develop skills and communication at the appropriate level, make a training need assessment for the relevant staff to strengthen capacity. Standardization of DHQ hospitals in the first 8 districts is to be initiated in FY05-06. Construction work for Standardization is to be completed by FY06. Indicators for monitoring and evaluation have been developed and baseline data collected from all the DHQ hospitals of NWFP will be analyzed.
The government will evaluate the effectiveness of autonomy granted to four teaching hospitals before extending autonomy to another 10 hospitals, including some DHQ hospitals. For Evidence Based Decision making, HMIS is to be provided adequate financing in the recurrent budget. A regular budget and technical staff are to be revived.
Increased Allocations for Health Sector
Investments and utilization have increased with realistic targets in key priority areas that include skilled birth attendance, hepatitis B and C prevention, and strengthening awareness, capacity building and empowerment at the district level (health staff as well as elected officials) for successful district devolution.
The Provincial Development Program aims to provide safe drinking water and sanitation services to the rural and urban population of the province with an integrated approach of promoting low cost technologies and improved hygiene practices to achieve better standards of health for the beneficiaries. To ensure sustainability of program interventions, active community participation is considered an integral part of the reform.
By the end of Fiscal Year (FY) 2008 the over all coverage rate for clean drinking water is targeted to increase from 66 % to 72% and access to toilets from 69% to 75% of the population and access to sewerage from 14 million people to 16.5 million in 2008 across the province.
The government aims over the medium term include (i) preparation of an action plan in consultation with stakeholders; (ii) improving management structure and human development; (iii) improving drinking water quality; (iii) focusing on proper disposal of solid waste for domestic and industrial effluent; (iv) devising a mechanism to control air and noise pollution; (v) removing obvious gaps in providing facilities; (vi) increasing budgetary allocations and user charges; and (vii) increasing reliance on the private sector with adequate regulation.
Some of the key reforms the government will undertake to achieve the objective include: (i) strengthening the reform unit, capacity building and training of staff; (ii) reviewing the experience of the pilot project and replicate them in other district; (iii) legislation (iv) updating data on air, water and noise pollution particularly in urban areas; (v) engaging the public directly on reform process; (vi) augmenting partnership with the private sector; (vii) establishing an auditing function; (viii) developing an action plan on waste water treatment plant, solid waste management and alternate energy sources.
Pillar Three: Invigorating a Competitive Private Sector
While overall macroeconomic management is a federal responsibility, the provincial government intends to focus on selected drivers of growth which will generate economic activity in the province and benefit the local population the most. Accordingly the government intends to focus on four major assets of the province, hydropower generation capacity, mineral resources, tourism potential and agricultural productive capacity, with the aim of attracting private sector investment in these areas that will generate employment and income opportunities for the people of NWFP.
In order to take maximum advantage of the hydel potential in the province the GoNWFP intends to appoint consultants to analyse the gains to the province under the alternative routes to develop hydel potential in the province, explore the various options available to utilise and sell power and the relative benefits, and assist the government in developing a revised Hydel policy for public and private investment in the province.
The policy will enhance the capacity of provincial projects, bring it in line with the Federal Power Policy 2002, and will address and clarify issues pertaining to tariff, identity of the buyer, guarantees, lease price and transfer of sites at the end of concession period.
New plans are being drawn up by the provincial government to develop a concept and framework of primary transmission lines, including application of NEPRA's provision for wheeling charges. The options being considered are selling electricity to different buyers.
A comprehensive plan is being chalked out for institutional strengthening and capacity building of SHYDO, appoint an experienced professional from the private sector as Managing Director to restructure and reorganize while a management audit of the organization is carried out. The provincial government will seek technical assistance from its development partners for capacity building and institutional strengthening of SHYDO.
NWFP has the potential to be the destination of tourists with a range of interest, providing thousands of jobs and growing incomes for the people of the province especially in the poorest and remotest region. The government believes that it can play an important role in mitigating impediments to the growth of tourism. The GoNWFP aims to achieve international standards in tourism. In the early years, it is imperative that NWFP obtain international technical and financial assistance to set up a successful program. The government believes that STC needs to be assigned a fresh role in provincial tourism development to achieve better results in the future. For the purpose, the government of NWFP plans to formulate a comprehensive tourism policy. The following key issues confronting tourism industry will be addressed in this policy:
i) Conduct a survey and assessment of all tourist attractions and potential sites and the needs of the industry and identification of the potential market as a basis for making decisions. Concurrently the Government of NWFP and STC plan to launch a program with professional help of improve the image of the province.
ii) The Government of NWFP has decided that the role of the STC should be restricted to that of facilitator and regulator. The government will also play the role of facilitation, developing on priority basis the full range of infrastructure around tourist areas.
iii) The government will set up training centers to develop range of tourism associated services to enable locals to participate in the growth of the sector.
iv) The Government of NWFP will review and amend if required all regulatory provisions to ensure quality and reliable service, adherence to international standards and safety.
v) The government will develop small airports in remote areas of interest to tourists and invite private sector companies to operate an appropriate air service to improve access.
vi) Only in very special circumstances will the STC intervene to provide lodging, restaurants or transport services.
vii) In order to protect the wildlife and biodiversity, the Government of NWFP plans to develop a master plan to develop protected areas such as national parks, nature reserves, sustainable use reserves, wilderness areas and cultural and historical heritage.
Preserving Arts and Crafts
Promotion and development of local crafts can also provide employment and generate incomes in underdeveloped areas of the province. In collaboration with local governments, such efforts will include establishment of artisan villages at the district level where common facilities for work display, marketing, and skills training could be provided. Also, financial institutions and the private sector would be encouraged to provide financing for local crafts development.
Preservation of Archaeological Sites
NWFP is rich in archaeological remains of Ghandhara and Indus Valley Civilizations. The government will make efforts for the conservation of these resources as a tourist attraction. The infrastructure facilities and means of communication in and around these sites and monuments would be upgraded and improved with publicity campaigns nationally and internationally to make them attractive to tourists.
Agriculture has been the backbone of the economy of the NWFP and will continue to be crucial in the medium-term. Agricultural growth is probably the most effective mechanism for poverty reduction, and a main driver of growth in NWFP. The following actions are being taken:
i) Strengthening Coordination and Service Delivery System
·Formation of multi-stakeholders District Agricultural Coordination Forum in all districts of NWFP. Constitution of core groups in horticulture, livestock, and agriculture sectors. Establishment of model farm service centres. Service delivery to the farmers will be ensured through one window facility.
· Provision of mobile soil testing laboratories, mobile livestock dispensaries and vaccine services. Provision of quality and cost effective seed and fertilizer through farm service centres.
ii) Create Enabling Environment for the Private Sector Investment
iii) Introduction of Participatory Technologies
iv) Updating and Strengthening Existing Legislations
v) Tax Relief in Agriculture Sector
· Farmers having land holding of 5 acres or less have been exempted from the land tax.
· Fees on mutation of inheritance, tamlik, and division of land has been abolished from the next financial year.
· Some exemption on the outstanding Abiana will be offered to those defaulters who deposit their arrears before certain dates.
vi) Research and Development
· Establishment of biological control laboratories in Peshawar and D.I. Khan to control sugarcane pest. Initiation of farmer support program to control termites in all effected districts of NWFP. Opening up of agriculture engineering workshops at Bannu, Swat, and Mansehra and purchase of 100 bulldozers for the reclamation of waste land.
· Capacity building of nursery owners. Registration of nurseries for better quality control. Establishment of buffalo breeding farm to promote superior breed at D.I Khan.
NWFP has a diversity of precious gemstones and industrial minerals. The government believes that extensive development of mineral resources in the province can lay the foundation of industrial activities and opening up of remote areas contributing to reduction in poverty.
The GoNWFP plans to undertake the following measures for the technical and financial assistance to strengthen DGMM.
i) Logistic support
ii) Strengthening of Staffing of the Three Wings of DGMM
iii) Capacity Building for Quality Output
iv) Technical Assistance
v) The government seeks financial assistance in development of infrastructures.
vi) Commercial Assistance
The share of manufacturing in provincial GDP is less than the national average. Since manufacturing has been the fastest growing sector of the national economy, it has naturally translated into slower economic growth in the province compared to the rest of the country. The locational disadvantage of the province in relation to the country's main port and agricultural raw material producing areas and major markets has been the main reason for the resulting economic structure of the province.
Institutional and Policy Reforms
With more than 700 units closed or sick and less than 60,000 people employed in the industrial sector, the provincial government intends to adopt measures that will create a conducive environment for the growth of the industrial sector in the province. The provincial government has drawn up a comprehensive relief and facilitation program for the industrial sector in collaboration with the private sector.
· Exempt industrial units in the industrial estates of NWFP from the imposition of property tax for a period of 5 years. Also applies to new units. Do away with the unnecessary labor inspections. Exempt the industrial units in NWFP from the payment of Education Cess
· Setting up of an Industrial Facilitation Council to be headed by the Chief Minister. Decided, in principle, to provide relief to the industrial sector in the province in the form of up to 25 percent rebate on electricity consumption by selected industries for a period of three years.
Construction contributes a large share of GDP in the province. Improving the performance of construction companies in NWFP to the level of firms in the rest of Pakistan is one of the key objectives of the provincial government. To overcome the weaknesses and accelerate growth in the sector, the provincial government will focus on the following key issues:
i) Public-Private Partnership
ii) Improvement and Standardization of Contracts
iii) Improvement to the Procurement Process
The GoNWFP will address the factors that currently impede the development of an enabling environment for efficient management of urban land. The government will consolidate title determining responsibility with one department. A centralized land registry system in the form of a central register of land title will be established with one central agency.
It has been decided in principle that all transactions related to properties would be subject to compulsory registration, and the Registration Act and the Stamp Duty Act will be amended accordingly. Enact legislation to abolish benami holding of property; narrow further the differential in property tax paid by rented and owner-occupied properties; and revise the Rent Restriction Ordinance to reduce the pro-tenant bias.
Dispose of land owned by the provincial government and local governments in prime commercial locations. The regulatory framework including zoning, floor-area ratios (FARs), and building control regulations, will be updated and revised in line with the international standards. Moreover, the CDGP, CDMD, and CB building byelaws will be revised to ensure more uniformity in rule and regulation across various government agencies involved in urban development.
The provincial government has set the following sustainable targets in a medium-term budget framework: real GDP growth of 7 -7.5 percent over a five-year period, job creation in the private sector from 4.7 million in 2005 to 5.9 million in 2010 and reduction in the rate of unemployment from 13 percent in 2005 to 9.6 percent. These economic outcomes are likely to lead to a substantial reduction in poverty incidence in the province. Key to raising the rate of economic growth in the province is raising total investment both public and private as well as improving efficiency and prioritization of public investments.
The high-growth strategy adopted by the government in the Provincial Development Program will require additional public resources as GoNWFP invests in roads, irrigation, energy, and other infrastructure. Both provincial and local governments will have to increase the level of and returns to public investment. In addition, there is need to improve delivery of social services. In short, all this will have resource implications for provincial and local government's finances.
NWFP is dependent for 90 percent of its resources on revenue transfers from the federal Government. Stepping up public expenditures in the NWFP will require additional own resource mobilization, but will also require support from the federal government and external development partners. Additional resources will be mobilized from these five sources: (i) own provincial and local government resources; (ii) transfers from the federal government; (iii) payment of Net Hydel Profits; (iv) borrowing (both domestic and foreign); and (v) foreign grants.
To increase own revenue the GoNWFP will further improve its tax policy and tax administration. The GoNWFP plans to explore the possibilities of increasing provincial taxes such as Motor Vehicle Tax, Stamp Duty, Professional Tax and Urban Immovable Property Tax. The provincial government will also improve tax administration to increase collections.
In addition the GoNWFP would rely on the private sector for many activities and leasing out/sell assets, including tourism services, hydel generation, raise resources by auctioning/leasing high-value state-owned lands for urban development. It would make efforts to privatize public assets.
Increased resource transfers through a new NFC Award will be necessary to complement the provincial government's own efforts. The province expects to get timely payments of hydel profits. The GoNWFP, GoP and WAPDA, have signed an arbitration agreement to settle any dispute regarding hydel profits. The government will continue to follow a strategic debt management policy to create more fiscal space and reduce the debt servicing burden. The government has also formulated a provincial Debt Management Strategy with the objective of creating more fiscal space by premature retirement of remaining Cash Development Loans (CDLs) (worth Rs.25 billion by end FY05) and renegotiating the terms of the existing loans with the Federal Government. The GoNWFP would continue to seek budget support from international financial institutions (IFIs) as in recent years.
The government plans to: (i) increase development spending from an average of 1.8 percent of GDP in FY02-04 to 2.2 percent of GDP by FY09-10. It would like to place a share higher than 6 percent of development funds to district government for development purposes; (ii) increase spending on Operations and Maintenance (O&M) to preserve the value and productivity of public capital stock with a benefit both for past and future investments. (iii) contain public consumption (excluding O&M and non-salary transfers to districts, which is roughly half of the total transfers to districts) to 4.9 percent of GDP on average over the medium term (first three years), gradually declining to 4.7 percent of GDP by 2010.
The profile of provincial public expenditures and public investment program would be aligned with the goals of growth and poverty reduction set by the province. Better alignment requires developing a strategic thrust and ensuring the buy-in of various stakeholders. Developing a medium-term budgetary framework (MTBF) would help align expenditure priorities with policy goals. In addition, the Chief Secretary, Finance, P&D and Local Government Departments would help broaden awareness and ownership of the reform program in the provincial line departments and District Governments.
The efficiency of public investments would be enhanced by overcoming the deficiencies occurring at each stage in management of public investment expenditures, including project planning and selection, implementation, and monitoring and supervision. The GoNWFP realizes the importance of operation and maintenance of important projects.
d) Improving Governance
The government's vision is to contain the size of the civil service, increasing posts and/or hiring mainly in high priority areas (education, health and police). An important element is to maintain merit and transparency in new recruitment, postings and transfers, as part of its overall strategy of being a clean government that is accountable and accessible to the electorate.
Improving financial management and accountability:
· Reconciliation of all Provincial Accounts by 2006
· Extend PIFRA to all 12 District/Sites in the Province during 2006-7.
· Improve coordination between PIFRA and the Department of Finance.
· Extend function of internal audit to all 24 Districts by 2006-2007 and frame and implement Local Govt Internal
Audit Rules and Guidelines.
· Establish Tehsil/Town Account Offices and adopt an accounting framework for accounting at Tehsil / UC
· Maintain currency in review of Audit Reports and clear backlog of pending Audit Reports.
· Complete procurement training for Govt. Officers and Institutions. Revise Composite Schedule of Rates.
Abolish post-bid negotiations
· Ensure adoption of the new system by all Departments and Govt. Agencies by FY 2005-06
Reform of the Civil Service
· The Provincial Public Service Commission to reduce the time frame of recruitment into civil posts through
computerization of applications and question papers.
· Maintain the rate of creation of new posts under 3%. New posts to be created only in Health, Education and
· Enhance time-in-post of Secretaries to 24 months by 2006
· Complete and put into operation the Human Resource Management Database for personnel planning and
· Remove inconsistencies in the rules relating to devolution and make all rules consistent. Complete devolution of
administration and financial authority to districts.
· Create a Local Government Career Service
· Continue targeted training for key Government Officials working in Districts and Tehsils.
Monitoring and Reporting
The government plans the following actions to improve monitoring and reporting:
- Complete the annual CWIQ survey on staff absenteeism in Health and Education Departments and disseminate data to the public.
- Devise and install an independent system of monitoring and evaluation of development projects in the Districts.
- Prepare and disseminate Annual Monitoring Reports by Reform Units.
- Develop Third Party Validation Surveys for monitoring Social Services.