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					    DSP Quarterly
    NEWSLETTER OF THE DECENTRALISATION SUPPORT
                    PROGRAMME


                 Issue 1: December 2003



In this Issue:

•   Welcome letter from NPSC Chairman
•   FEATURE: What is DSP?
•   How is DSP Different?
•   DSP UPDATE: Federal and Provincial Activities
•   INTERVIEW: Shaukat Durrani, First National Programme
    Director
•   TA1 Annual Work Plan – Stage One
•   Highlights of Some TIPs
•   Open Forum for Bidding on DSP Investments
•   How Can DSP Help You?
•   Mapping of Capacity Building Initiatives
•   FEATURE: Devolved Service Delivery Study
•   Contact Information
Welcome Note From NPSC Chairman

Dear Readers,

‘Welcome to the first newsletter of the Decentralisation Support Programme.

‘DSP is an exciting new initiative by the Government of Pakistan, in collaboration with Asian
Development Bank, to strengthen decentralisation in Pakistan. DSP is a broad-ranging
programme designed to meet the various requirements of decentralisation reform - funds,
communication, training and systems. In this way, it will help ensure that the new local
government system in Pakistan is a success.

‘In this first issue of DSP Quarterly we see exactly what DSP entails, and why it is
different from other donor-supported programmes in Pakistan.

‘One of the main objectives of the Quarterly is to provide regular, updated information
about DSP activities and their impact on local government functioning. DSP has come a long
way since its inception. Offices are up and running at federal and provincial levels. The
first projects under TA1 for Local Government Performance Enhancement – a component of
DSP designed specifically to meet the capacity and systems needs of those involved with
local government – were approved in August. Worth Rs.229 million, they cover a broad
range of activities. Work is now starting on their implementation

‘It has to be stressed, though, that DSP is a work in progress. While much has been
achieved, much more remains to be done. Your participation is essential for this. The
Quarterly will show you how you can get involved, and how DSP can help you.

‘The ultimate goal of DSP - and the whole decentralisation reform process - is improved
service delivery at the grassroots: better education, better healthcare, better roads,
better sanitation, and so on. A joint ADB-DFID-World Bank team has just undertaken the
Devolved Service Delivery Study in six districts to find out if decentralisation is helping
service delivery. The DSD’s scope and initial findings are recounted on p. ___. Shaukat
Durrani, first National Programme Director, recounts his experiences on p. __.

‘DSP Quarterly has the same objectives as the overall DSP: to     enhance understanding and
promote participation by the maximum number of stakeholders.      DSP Quarterly depends on
you for its success. The editors look forward to receiving your   comments and feedback on
the Quarterly and on the Decentralisation Support Programme.       Reader feedback will be a
regular feature in subsequent issues.

‘I hope that you will find this first issue of DSP Quarterly interesting and informative. On
behalf of myself and all the members of the National Programme Steering Committee, I
wish DSP Quarterly and the Decentralisation Support Programme every success.’

Ismail Qureshi
Chairman, National Programme Steering Committee.



                                             2
1. What is the Decentralisation Support Programme?

As its name suggests, the Decentralisation Support Programme seeks to bolster
devolution reform in Pakistan. Devolution of power is one of the most important
reforms introduced in Pakistan in recent years. Devolution brings multiple benefits:

   !    Takes power and decision-making to the grassroots
   !    Promotes community (especially women’s) participation in government
   !    Improves service delivery and accountability
   !    Promotes better local representation
   !    Leads in the long-term to poverty alleviation.

Realising this goal will not be easy. Substantial progress has been made, but much
remains to be done. The main issues, aside from overcoming the opposition of vested
interests determined to hold on to the old system, have been lack of funding, lack of
capacity and lack of systems.

The Government of Pakistan is strongly committed to implementing decentralisation
and making it a success. It appreciates that devolution is the key to better service
delivery and poverty reduction. The $300 million Decentralisation Support Programme
(DSP) is designed to do this. DSP is being executed by the Ministry of Finance and
Provincial Finance Departments, with funding support from Asian Development Bank.

DSP seeks to bolster decentralisation reform by addressing the key problem areas that
have emerged in implementation: funds, capacity and systems.

DSP Components

ADB’s   support for DSP is divided into four financing components:
   1.    $270 million – Programme loan
   2.    $23 million – TA1 for Local Government Performance Enhancement
   3.    $7 million – TA2 for Governance and Gender Mainstreaming
   4.    $2.9 million – Advisory Technical Assistance Grant

1. Programme Loan
The programme loan is for budgetary support to the federal government. It will
create the fiscal space that will allow the GoP to meet the costs decentralisation.
These costs include setting up new offices, buying equipment, and ensuring that
adequate funds are transferred to local governments. It has already helped the
federal government meet its commitment to transfer 2.5% GST to local governments.

According to Dr Douglas Porter, ADB’s Senior Governance Specialist, ‘The ADB
programme will enable central Government to bear the medium-term costs of
decentralisation to make sure the process will be entrenched and sustainable.’


‘The ADB programme will enable central Government
to bear the medium-term costs of decentralisation to make
sure progress will be entrenched and sustainable.’
                     Dr Douglas Porter, Senior Governance Specialist, ADB


                                          3
But decentralisation requires more than money. There is a pressing need for capacity
building across all three tiers of government, and across the political leadership-civil
service divide. In many cases, there is also a pressing need for new systems to be
introduced to reflect and accommodate the altered political, fiscal and administrative
realities. Accounting systems for district governments, for example, and guidelines for
the new Provincial Finance Commissions.

2. TA1 for Local Government Performance Enhancement
TA1 is specifically to meet capacity building and systems requirements of various
federal, provincial and local level stakeholders.      It was included in DSP in
acknowledgement of the fact that hard-pressed government departments are unlikely
to allocate resources for training or for new systems.
TA1 has the following features:

   ! TA1 covers 11 thematic areas, with a deliberate stress on aspects of fiscal
     decentralisation, e.g. accounting, budgeting, audit, the Provincial Finance
     Commissions.
   ! TA1 gives priority to basic capacity needs [understanding what accounts are,
     what a budget is, how audit is carried out?] and to the bottom-most tiers of
     government (district, tehsil, union).
   ! In addition to civil servants and elected representatives, TA1 has a role for civil
     society groups – either as service providers and contractors, or as recipients of
     TA1 support.

Women form a key group that has traditionally been excluded from politics and
decision-making in Pakistan. The devolution implemented to date has given female
participation in government a big jump-start: 33% of seats in local government
councils have been reserved for women, and 15% in the Provincial and National
Assemblies and Senate. This is a good start, but much work needs to be done to
consolidate women’s participation and ensure it is effective.

3. TA2 for Gender and Governance Mainstreaming
This is a $7 million component of the DSP, designed to address the problems of
women’s participation in politics and government, and the inclusion of women’s needs
and priorities in decision-making.      TA2 will promote and facilitate women’s
participation in government planning and decision-making. It will also encourage
planning and development that cater to women’s needs.

4. ADTA Grant
In addition to the loan instruments, a grant totaling $2.9 million has been mobilized by
ADB, with co-financing by DFID, CIDA and the Dutch Government. This is being used to
hire a team of specialists to provide technical and strategic assistance for the
implementation of DSP. The four objectives of the ADTA are:
    ! Provide support to the Programme Support Offices;
    ! Provide technical assistance to implementing agencies;
    ! Promote performance monitoring and policy development;
    ! Promote strategic exchanges and policy development.




                                           4
Implementation Arrangements

The executing agency for DSP is the Ministry of Finance. The Programme is being
executed by the MoF through institutional arrangements exclusively established for its
implementation. These comprise two parallel structures, one to lead DSP and the
other to implement it.

Leadership of DSP
- National Programme Steering Committee and four Provincial Programme Steering
Committees:
    ! These provide strategic guidance and decide allocation of resources.
    ! Members include representatives of relevant government departments, local
        government personnel and civil society groups.
    ! The PPSC’s have majority local government representation.

Implementation of DSP
- National Programme Support Office within the MoF and four Provincial Programme
Support Offices in the provincial finance departments.




                       DSP COMPONENT PURPOSE

          $270 million Programme Loan: To support creation of fiscal space to
                                       meet the adjustment costs of reform,
                                       including transfer of 2.5% GST to local
                                       governments.

  $23 million TA1 for Local Government For capacity building of elected
            Performance Enhancement: representatives, civil servants and other
                                       stakeholders;

                                              For development and installation of
                                              systems needed for decentralised
                                              government.

      $7 million TA2 for Governance and To promote female participation in
                  Gender Mainstreaming: government and decision-making;

                                              To ensure government planning caters for
                                              women’s needs.

                $2.9 million ADTA grant: To help Ministry of Finance and provincial
                                         governments in implementation of DSP.




                                          5
Release of Funds

DSP funds are being released to the GoP by ADB in two tranches ($120 million and $150
million respectively), each with pre-conditions attached. Release of the first tranche
requires, for example, that the LGO, the CGA Ordinance and Auditor General
Ordinance be enforced, and Rs.1 billion be set aside in the 2003 budget for a
decentralisation transition grant. Release of the second tranche in June 2004 will be
dependent on 11 ‘decentralisation markers’ being reached, e.g. that the services of
district ombudsmen are available to citizens in each district.

DSP should play a crucial role in ensuring that the local government system
introduced in Pakistan is successful and delivers its ultimate goals – better
accountability, better service delivery, better local representation and a reduction
in poverty.




3. How is DSP Different?
DSP is a very different kind of donor-supported programme in Pakistan. In many ways
it breaks totally new ground:

a. Demand-driven Programme

This is the guiding principle of DSP: all support that is given is based on demand from
the recipients.
    ! This approach is especially evident in TA1 – the component of DSP which
        provides capacity building and systems support. All those eligible for TA1
        assistance, i.e. local governments, provincial and federal departments and
        bodies, have to first identify what kind of capacity building or other help they
        need, and then apply for it.
    ! Being demand-driven gives TA1 a big advantage over other more traditional
        capacity building programmes. They tend to be supply-driven (i.e. provide
        training to match the perceptions of donors rather than recipients]. Capacity
        building under TA1 will be effective because it meets local needs, and because
        – having asked for it – the recipients have ownership in it.
    ! The Provincial Steering Committees have majority local government
        membership. This ensures that the projects approved for funding really are
        determined by the needs of those applying.

b. Innovative Projects

The fact that DSP and TA1 support is determined by the needs of recipients
automatically makes the programme flexible. Assistance is tailored to meet local
needs, whatever they may be. This in turn encourages innovation. Aside from the
condition that they fall within the 11 thematic areas of TA1, there is really no limit on
the kind of investment proposals that clients can submit.




                                           6
c. Public-private Sector Partnership

Capacity building and other assistance under TA1 will be sought from the best
providers, be they in the private or public sector.

For each project, the Programme Support Office will seek the most suitable capacity
building or service provider for that project. The guiding principle for selection will
be best practice: who can best meet that need in the most cost- and time-efficient
manner. This approach should result in a range of public and private sector service
providers working with the PSOs on implementation of DSP.

Civil society groups also have a key role to play in DSP and TA1 – both as service
providers and as recipients of TA1 support.

DSP seeks to include all stakeholders to ensure that they can all play a role in making
decentralisation in Pakistan a success.

d. Running of the PSOs

Though falling under the umbrella of the Ministry of Finance, the PSOs have been
established and will be run on lines quite different from traditional government
offices:

   ! PSO staff have been hired from the public and private sector in a totally
     transparent, competitive, merit-based recruitment process.
   ! Those hired are paid much more than their government counterparts.
   ! They are also expected to do all their own work: the PSOs do not have the
     armies of peons and other support staff found in government offices.
   ! All candidates had to sit a test to ensure their proficiency in working with
     computers.
   ! Staff have been hired on performance-based contracts.

e. Technical Assistance

An ADTA grant mobilized by ADB is paying for a team of (initially) six consultants to
work with the PSOs and PSCs on implementation of DSP. The consultants’ role is to
provide strategic and technical assistance as needed.

This kind of donor-funded technical support is an efficient and effective compromise
between a 100% donor-run programme, and a 100% government-run programme: it
allows for the optimal partnership between government and donors. Other donors are
already keen to follow the example of ADTA assistance set by ADB in the DSP. A
number are co-financing the ADTA support for DSP. This is also acknowledgement of
the common platform DSP offers donors keen to support decentralisation in Pakistan.

f. Donor Monitoring

DSP places the onus on the Government (which, ultimately, will have to repay the
loan) to ensure that money is spent properly. ADB is not concerning itself with day-to-




                                           7
day running of the programme. This is markedly different from traditional donor-
funded programmes in which monitoring is a key component.

But ADB is following DSP’s progress – not by monitoring implementation, but by
assessing end results. ADB and GoP have together identified certain critical markers,
which will serve as proof that decentralisation reform in Pakistan is on track. These
include enforcement of the LGO, CGA Ordinance and Auditor General Ordinance;
transfer of 2.5% GST to local governments. ADB will be looking for the GoP to reach
those markers within specified periods of time.




4.    DSP UPDATE
DSP became operational in 2003. Getting the programme up and running entailed
three related sets of activities:
i.     The government carrying out a number of policy actions to meet the conditions
       for loan effectiveness set by ADB, e.g. promulgation of the Local Government
       Accounts Code in all four provinces, establishment of a Rs.1 billion Devolution
       Transition Grant.
ii.    Notification of the relevant committees: National and Provincial Programme
       Steering Committees, and Federal and Provincial Technical Committees.
iii.   The establishment of the National Programme Support Office and four
       Provincial Programme Support Offices. This in turn entailed recruitment of
       staff, locating and fitting of offices, and procurement of equipment.

In terms of the DSP agenda, the main item was to get TA1 for Local Government
Performance Enhancement underway. This entailed:
i.     Development of an Annual Work Plan process
ii.    Preparation of required brochures and handbooks
iii.   Identification and orientation of focal persons
iv.    Conduct of participatory dialogues for preparation of Investment Proposals (IPs)
v.     Screening and short-listing of IPs and conversion into Technical Investment
       Proposals (TIPs)
vi.    Appraisal of TIPs by Technical Committees, and preparation of draft Annual
       Work Plans
vii.   Approval of Annual Work Plans by Provincial Programme Steering Committees
viii.  Approval of Integrated Annual Work Plan (provincial and federal plans) by
       National Programme Steering Committee.

At the time of writing (October 2003) all the policy actions needed for DSP loan
effectiveness had been carried out. All relevant committees had been notified. The
NPSO and all four PPSOs were operational. Stage one of the Annual Work Plan for TA1
was approved by the NPSC on 5 August 2003.




                                           8
Federal and Provincial Updates

A detailed breakdown of DSP activities at the federal and provincial levels is given
below:



             ACTIVITY                                     PROGRESS


National PSO
Notification of Steering Committee Completed
            Establishment of Office Established in Federal Bank for Cooperatives
                                     Building, Sector G-5/2, Islamabad
           Recruitment of PSO staff All main positions filled
       Nomination of Focal Persons One focal person nominated in each of four
                                     federal Implementing agencies
           Focal Persons Workshops One workshop for all four federal IA’s
                   Submission of IPs 20 TIPs submitted
                 Preparation of TIPs 8 TIPs prepared
           Notification of Technical
   Committee and appraisal of TIPs Completed
            Draft Annual Work Plan Submitted to NPSC
                   Approval of AWP 7 TIPs approved
            Miscellaneous Activities     ! Preparation of DSP information brochure
                                             and printing in Urdu (6,000 copies), Sindhi
                                             (2,500) and English (1,500).
                                         ! 700 focal persons handbooks printed
                                         ! Mapping of Capacity Building Initiatives
                                             conducted by ADTA team
                                         ! Open Forum on Bidding for DSP
                                             Investments held on 4th October in
                                             Islamabad

NWFP PSO
Notification of Steering Committee Completed
            Establishment of Office Established at 56-E Canal Road, University Town,
                                     Peshawar
           Recruitment of PSO staff All main positions filled
       Nomination of Focal Persons 91 nominated
           Focal Persons Workshops 5 held
                   Submission of IPs
                 Preparation of TIPs
           Notification of Technical
  Committee and Appraisal of TIPs Completed
            Draft Annual Work Plan Submitted to PPSC and then to NPSC
                   Approval of AWP 9 TIPs approved
            Miscellaneous Activities    ! Naib Nazims Conference held in Abbotabad
                                            on 28 April, 2003


                                          9
Punjab PSO
Notification of Steering Committee Completed
            Establishment of Office Established at 211-B, Ahmad Block, Garden Town,
                                     Lahore
           Recruitment of PSO staff All main positions filled
       Nomination of Focal Persons 156 nominated
           Focal Persons Workshops 8 held
                   Submission of IPs 238 submitted
                 Preparation of TIPs 8 TIPs prepared
           Notification of Technical
  Committee and Appraisal of TIPs Completed
            Draft Annual Work Plan Submitted to PPSC and then to NPSC
                   Approval of AWP 8 TIPs approved
            Miscellaneous Activities     ! Workshop held for DCOs on 14th June,
                                             attended by 33 DCOs

Sindh PSO
Notification of Steering Committee Completed
            Establishment of Office Established at 1 Mezzanine Floor, Beaumont
                                     Plaza, Beaumont Road, Karachi
           Recruitment of PSO staff All main positions filled
       Nomination of Focal Persons 118 nominated
           Focal Persons Workshops 5 held
                   Submission of IPs 159 IPs submitted
                 Preparation of TIPs 19 TIPs prepared
           Notification of Technical
   Committee and Appraisal of TIPs Completed – 17 TIPs approved
            Draft Annual Work Plan Submitted to PPSC and then to NPSC
                   Approval of AWP 8 TIPs approved
            Miscellaneous Activities --

Balochistan PSO
Notification of Steering Committee Completed
            Establishment of Office Established at 15-B Chaman Housing Scheme,
                                     Airport Road, Quetta
           Recruitment of PSO staff Not all positions filled
       Nomination of Focal Persons 99 nominated
           Focal Persons Workshops 4 held
                   Submission of IPs
                 Preparation of TIPs
           Notification of Technical
   Committee and Appraisal of TIPs Completed
            Draft Annual Work Plan Submitted to NPSC
                   Approval of AWP Five TIPs approved
            Miscellaneous Activities --




                                        10
5.     Interview with Shaukat                  Durrani,     the    First    National
       Programme Director
Shaukat Durrani, Joint Secretary, Ministry of Finance, was appointed as the first
National Programme Director in November 2002. He was closely involved in all aspects
of the programme, from conceptualisation to notification of the Steering Committees
and establishment of the PSOs. The Quarterly caught up with him in his Islamabad
office to ask him about his experience of DSP:

Q. How did you get involved with DSP?

A. I used to work on provincial finances in the Ministry of Finance. I got involved in
the initial discussions with ADB about how it could support decentralisation reform. In
those initial stages the programme being envisaged was called Devolution Support
Programme – it only later became the Decentralisation Support Programme. I was
involved in development of the DSP policy matrix. I was effectively the focal person
for the Government in discussions with ADB and provincial governments. I reported to
Javed Sadiq Malik, AS (F&P).

Once the loan was finalized with ADB, I was asked to take over DSP formally as
National Programme Director in November 2002, in addition to my office of Joint
Secretary. Until then DSP had been in the conceptual stage; that was the time to start
implementation – to transform dreams into reality. I was very keen to do this,
because I had put so much input into the policy matrix.

Decentralisation in Pakistan is a very vital and very radical reform. It involves the
transfer of political, administrative and financial authority to local governments.
Under the agreed policy action, the GoP was committed to transfer huge funds to
support the local government structure: transfer of 2.5% of 15% GST is one of the loan
conditions. I wanted to ensure that the funds were utilized properly and
decentralisation reform succeeded.

Q. What was the initial period of DSP implementation like, and what problems did
you face?

A. The main problem with implementing DSP was that we were trying to create
something from nothing – no office, no personnel, no support. Indeed, we started
setting DSP up from my existing office of the Joint Secretary.

Establishment of something like DSP involves a lot of secretariat and paper work –
preparing and generating documents. For this, you have to have people who
understand the programme concept and know how to prepare and generate what is
required. The only official support I was able to get during this period was Mr Tanvir
Azmi - a good, young worker. Consultants hired by ADB joined me and gave me great
assistance in setting DSP up. They effectively carried out the role that Government
staff should have done, had they been on board.

The big breakthrough in setting up DSP I think, was securing accommodation for the
DSP office in the Federal Bank for Cooperatives Building. ADB helped to prepare
offices for their consultants. That created the first proper work place for DSP.


                                          11
The other major event was preparation and approval of the PC-1 for the programme.
The PC-1 is the basic document for any project. Without the PC-1 no funds can be
spent. Musharraf Cyan and his ADTA team did a lot of work to come up with a draft
PC-1. The draft was reviewed at various levels and by various committees, and finally
approved by the Planning Commission.

The lesson from this experience is that any project should be supported by some kind
of dedicated people to kick-start it before finalisation of the PC-1.

Q. There are many innovative features of DSP. What particularly strikes you?

A. DSP is very innovative. It is based on the demand-driven concept, promotes
private-public sector partnerships, takes ideas from people in the local government
system, and so on.

The PC-1 in particular takes a very innovative approach, different from normal
government procedure. We were able to include a lot of flexibility in it in terms of
project approval. In the PC-1 ECNEC has given authority to the Programme Steering
Committees and Technical Committees to approve projects according to demand.

Preparation of the first Annual Work Plan involved discussions with lots of
stakeholders. They were asked to develop proposals based on their needs and the kind
of support they wanted.

The other point to stress is that all the PSOs are now operational. DSP gives a lot of
incentive to the people working in it, both government staff and consultants.

Q. What would you say have been the main achievements of DSP?

A. Firstly, I think the fact that we were able to negotiate the loan in a constructive
manner, in the interests of the Government of Pakistan. We secured $270 million for
budgetary support, in lieu of which 2.5% GST can be transferred to local governments.
I feel very comfortable because the policy actions for the first tranche were such that
the Government could easily achieve them. I was delighted that all the policy action
conditions were met by the time I left DSP.

Another achievement was bringing the provincial governments on board. Initially the
provincial governments were not responsive, but we persuaded them at all levels to
come on board. This was possible because, firstly, DSP support to the provincial and
local governments is a grant from the federal government. Hence it entails no
financial liabilities on the part of provincial funds. Secondly, the spirit of
decentralisation was fully projected and full autonomy was granted to the Provincial
Steering Committees and PSOs in implementation of the programme. Bringing the
provinces on board was a very difficult job, which we did in a very short period of
time.

This is true of DSP as a whole. I am very proud of what we achieved – getting DSP up
and running in less than a year – in such a short time period. Now this programme is




                                           12
moving at a very fast pace, and you can see the difference with other programmes –
DSP is performing much better.

Q. How would you describe the collaboration between ADB and the Government?

A. ADB has been very responsive. They really wanted DSP to succeed. Dr Doug Porter
in particular was very keen: like me he was involved in DSP from day one, in the
negotiations and all the different stages. Musharraf Cyan and the ADTA team gave
great assistance in setting DSP up: in the early days they filled the gap due to lack of
government support. And ADB was also pleased to facilitate my work. They awarded
me a certificate for best Programme Director.

Q. With hindsight, is there anything you would have done differently?

A. In the ceremony in which ADB presented me with a certificate, I pointed out the
importance of preparing a manual of instructions for new Programme Directors. In our
system of governance there are a lot of problems in the implementation of projects. A
big one is lack of coordination – at every step the PD has to move himself. This was
relatively easy for me because I was sitting in the Ministry of Finance: had I been in
some other Ministry it would have been much harder. I also got support from ADB:
they were actually performing the functions of the government. But for the future,
designated Programme Directors should be given some sort of logistical support from
day one. They should also be given a detailed guidance manual on how to move in the
government for the achievement of different steps for establishment and
operationalisation of offices, etc.

Q. How do you see the future of DSP?

A. I think that DSP will be very useful in future, and its achievements will impact the
local government system in this country. It is very important, however, for those
working in DSP to understand the programme. The only potential problem I foresee is
a non-committal attitude to DSP among PSO staff. They should not become
‘routinists’: they should think in an innovative way and they should appreciate the
ideas they get from different levels – albeit the union or tehsil level, elected
councilors, officials. If the PSO staff are committed, then there is ample chance for
the programme to succeed.




6.     TA1 Annual Work Plan – Stage One
$23 million of DSP funds have been allocated specifically for TA1 for Local Government
Performance Enhancement. TA1 addresses two major weaknesses that have so far
emerged in the functioning of local governments: lack of systems and lack of capacity.

The guiding principle for TA1 support is demand. All those eligible, i.e. local
governments, provincial and federal departments and bodies, have to first identify
their own needs and then seek assistance from TA1 to meet those needs.




                                          13
This process started in April 2003 with:
    1. The dissemination of TA1 information brochures and a series of focal persons
       workshops across the country.
    2. These generated over 600 Investment Proposals (IPs) in the provinces and from
       the four federal implementing agencies.
    3. The IPs were screened by the Programme Support Offices, and short-listed
       proposals were converted into Technical Investment Proposals (TIPs).
    4. In each province the TIPs were collated into draft Annual Work Plans.
    5. After clearance by the respective Provincial Steering Committees, the
       Integrated Draft Annual Work Plan (incorporating the Provincial and Federal
       Work Plans) was submitted for approval by the National Programme Steering
       Committee.

On 5 August the NPSC gave the go-ahead for 37 capacity and systems development
projects, worth around Rs.229 million in total. The projects cover all three tiers of
government, and all four provinces. The breakdown across the provinces and federal
Implementing Agencies is as follows:

                                                  Number of Proposals
               Federal IA’s                               7
               Balochistan                                5
               NWFP                                       9
               Punjab                                     8
               Sindh                                      8
               TOTAL                                     37

Building Basic Capacity:

The projects in this year’s Work Plan place a stress on basic capacities. Two of the
important ones for Punjab, for example, are to provide training in budget and planning
to officers in the Tehsil Municipal Administrations and District Governments. The
Sindh Work Plan also includes budget training, while NWFP has a project to develop a
guide book for budget preparation.

Helping Civil Servants:

Civil servants are the backbone of the local government system. It is vital that they
understand and be trained to carry out the new responsibilities assigned to them under
the local government system. In recognition of this, almost half of the projects
approved in the Work Plan are for capacity building or development of guidelines for
local government officials. In addition to the examples given above, these include:
development of TMA financial reporting systems, strengthening the skills of TMA
support staff, and developing, printing and distributing a Compendium of Local
Government Laws.

Helping Councilors:

Elected officials – councilors – are as important to the success of the local government
system as civil servants. The Work Plan includes projects to assist them in performing
their role. The Punjab work plan provides for a study to assess the capacity building


                                          14
needs of Council Committees. NWFP goes one step further, with a scheme for
institutional strengthening of Monitoring Committees. The NPSC also approved a
proposal for institutional strengthening of the NWFP Naib Nazims Forum (see Box 1).

Strengthening Institutions:

The Local Government Ordinance has created a number of totally new bodies and
institutions, notably the Provincial Finance Commissions (PFCs) and the Local
Government Commissions (LGCs). The PFCs have a crucial role to perform in
determining the formulae for resource transfers to local governments and in ensuring
that these transfers are timely, predictable and adequate. The LGCs have an equally
critical mentoring and regulatory role to perform. To date, both PFCs and LGCs have
not been effective because of lack of institutional strength, including funds and
operational guidelines.

The Work Plan includes schemes for institutional development of the PFCs in all four
provinces, and of the LGCs in Balochistan and NWFP. The former include development
of a comprehensive set of fiscal transfer rules, rules of business for the PFCs and
reporting formats, as well as databases on local government fiscal need, capacity and
finances. The LGC schemes include a series of interactive workshops between LGC
members and stakeholders, training of LGC members and their staff, and the
development of LGC rules of business, as well as institutional processes for inter-
governmental dispute resolution.

It will be clear from this and other examples that the TA1 Annual Work Plan places
great stress on innovation. Many of the projects included in the Work Plan break
totally new ground. This is a deliberate feature of the Decentralisation Support
Programme as a whole, which seeks to move out of the traditional confines of
donor/government assistance. Responding to local demand is the first and key step in
this approach.

The Work Plan approved by the NPSC is only the start of a process of local government
support that will continue for four years. TA1, and the Decentralisation Support
Programme as a whole, can play a crucial role in ensuring that the local government
system introduced in Pakistan is successful and delivers its ultimate goals – better
accountability, better service delivery and a reduction in poverty. As the Chairman of
the NPSC stated in its meeting, no one should lose sight of these vital end goals.




                                          15
7.    Highlights of some TIPs



Box 1: NWFP Naib Nazims Forum

Associations of local councilors are the norm in countries with established
decentralisation systems. Such associations allow interaction among counterparts,
sharing of experiences (and problem-solving strategies), and provide a collective
voice to local governments when dealing with, for example, provincial governments.

On 28 April 2003, at a Conference held in Abbotabad, the District Naib Nazims in the
NWFP agreed to form themselves into the NWFP Naib Nazims Forum. Barrister Javed
Abbasi, District Naib Nazim of Abbotabad, was appointed Chairman; Atta-ur-Rehman
(Mardan DNN) General Secretary, and six Naib Nazims (one from each of defunct
Civil Division of NWFP) formed the Committee. It was agreed that an office and
secretariat would be established, general body meetings of the Forum would be held
every three months, while the Committee would meet monthly.

The purpose of the Forum is to strengthen the role of the District Councils, take up
any contentious issues with appropriate fora, promote interaction, and allow
discussion of common problems to help find solutions.

The NPSC gave clearance for a Rs.0.97 million project for institutional strengthening
of the NWFP Naib Nazims’ Forum. The project addresses both the capacity and
resource needs of the Forum. The activities to be carried out are as follows:
i.     Assessment of the scope and mandate of the Forum
ii.    Development of an operational manual for the Forum
iii.   Provision of basic equipment (computers, printer, etc) for the Forum office
iv.    Development and implementation of a communications strategy to make the
       Forum more effective, including a directory of all members and a quarterly
       newsletter.

The TIP should be of considerable help in allowing the NWFP Naib Nazims Forum to
fulfil the great potential it has: both to make district councils in the Frontier more
effective, and to promote collective interaction and action. The long-term hope is
that, once the Naib Nazims Forum in NWFP is successfully established, similar
associations will be formed in Punjab, Sindh and Baluchistan.




Box 2: Policy Dialogue Strategy

Devolved government is a new concept in Pakistan: its implementation has entailed
radical changes in political, fiscal and administrative structures. Inevitably, there
have been teething problems, which require adjustments and modifications to be
made. This is best done through a dialogue process between stakeholders and
policy-makers. To date, no mechanism exists for such dialogue to take place in a
systematic manner.




                                         16
The NPSC approved a Rs.6.08 million proposal for a policy dialogue strategy to be
carried out. The aim of the dialogue strategy is to promote informed debate about
issues of concern to local government; to clarify issues; to ensure that policy
decisions are based on stakeholder consultation and feedback; and to promote the
legitimacy of the local government system (and hence its effective implementation).

The policy dialogue strategy will be carried out in a number of stages:
i.     Identification of issues of concern
ii.    Preparation and dissemination of briefing papers on issues to relevant
       stakeholders
iii.   Policy dialogues involving representatives of all relevant stakeholders
iv.    Publication    and    dissemination    of   policy   dialogue   outcomes and
       recommendations to relevant groups.

In this way it is hoped that the policy dialogue strategy will clarify and improve
implementation of at least some aspects of the new local government system. This
is a quite radical approach to policy making in Pakistan - one that also promotes
democracy and grassroots participation.




Box 3: Compendium of Local Government Laws

Implementation of the local government system is determined by the Local
Government Ordinance, Local Government Accounts Code, Local Government Budget
Code, as well as rules and orders issued by the provincial governments. At the level
of local government, there is a lack of information about the various laws, rules,
notifications and orders. Local governments frequently have to contact provincial
government departments to obtain this information. Due to the large volume of
requests received, the provincial government cannot always respond in a timely
manner.

The NPSC approved a proposal for Rs.12.44 million for Punjab, for the development,
printing and dissemination of a Compendium of Local Government Laws. The
Compendium will have three sections containing:
i.      Statutes, enactments and ordinances
ii.     Rules, regulations, bye-laws
iii.    Notifications, circulars, office memoranda, etc.
The Compendium will be produced in English and Urdu, and disseminated to all the
local governments in Punjab, as well as to provincial departments and autonomous
bodies. The Compendium will be updated throughout the life of TA1.

The Compendium will help ensure that all local governments have easy access to
laws and rules relating to their functioning, and that there is uniformity in the laws
and rules by which the different local governments are run.




                                         17
8.    Open Forum on Bidding for DSP Investments

The Open Forum on Bidding for DSP Investments was held on Saturday 4 October 2003
in the Marriot Hotel, Islamabad. The Forum was held to usher in the next stage of TA1
implementation, following approval of the TA1 Annual Work Plan (part 1) by the NPSC
on 5 August 2003. The 37 TIPs included in the AWP were open for bidding.

Capacity development and other service providers from the public and private sector
could bid for any of the TIPs included in the AWP. The PSOs, who will be making
contract decisions, are looking for best service providers, who can deliver timely and
cost-effective training, systems, etc. Contracts will be awarded solely on merit.

In order to put in good quality bids, and thereby increase their chances of being
awarded TIP contracts, bidders first need to be aware of specifically what each TIP
entails. The Open Forum was held to introduce potential bidders to DSP, TA1, the
AWP and specifically to explain the scope of the various TIPs. The Forum was also an
excellent opportunity to highlight the achievements of DSP to date, and promote
stakeholder participation in forthcoming DSP activities – starting with stage II of the
Annual Work Plan process which is now underway.

In order to ensure maximum effectiveness, all five PSOs were involved in the Forum.
Each PSO set up its own stall, manned by PSO staff. Charts summarising the individual
TIPs were displayed by the respective stalls. A handbook with one-page summaries of
all the TIPs was produced especially for the event. It was available at the DSP stall,
where visitors could ask questions about the overall objectives and scope of DSP. A
power-point presentation explaining DSP, TA1 and the AWP also ran throughout the
day.

The Forum began with a brief inaugural ceremony attended by government officials,
donor representatives, bidders, the media and others.         The (Acting) National
Programme Director Tauqir Ahmed welcomed everyone to the Forum. ADTA team
leader Musharraf Cyan gave an overview of DSP, TA1 and the purpose of the Forum.
NPSC Chairman Ismail Qureshi, as the Chief Guest, inaugurated the event.

Thanks to all the work that was put into preparing for the Forum, attendance was
excellent. Over 200 organisations/individuals filled out registration forms. This
information was fed into a database, which will be used by the PSOs in future
activities. The organisers are confident that the Open Forum would generate bids of
improved quality. Bidders were invited to submit Expressions of Interest to the
respective PSOs.




9. How Can DSP Help You?

You should by now have gained some idea of the scope of DSP and what it is trying to
do. But you’re probably wondering, ‘How can DSP help me?’




                                          18
The bulk of DSP funding creates fiscal space for the federal government to meet the
costs of decentralisation: new offices, equipment, ensuring that local governments
have funds for development and other spending, etc. If you are involved in local
government – as a councilor, as a civil servant, as a concerned member of the public –
you will feel the benefit of this DSP funding, but indirectly.

$23 million of TA1 funding will be allocated by the NPSO and PPSOs. This money is for
training and capacity development, systems and institutional strengthening. You will
see the benefit of TA1 support directly.

Who can get TA1 support?

– Anyone involved with local government, be they elected representatives or civil
servants, be they at the district, tehsil or union level;
- All Provincial departments and institutions dealing with local government;
- Four federal bodies: the NRB, CGA, AGP and MoWD.

How can you get TA1 support?

TA1 support is given out on a demand-driven basis. You must first identify what kind
of assistance (training, systems development, etc) you need. Then you must fill out a
form outlining your requirement and submit it to the appropriate PSO.

The PSO staff will process the form so that, if you are eligible for support, you can get
this. [The Steering Committee will make the final decision on approvals.]

Once your proposal is approved, the PSO will arrange for you to be given the
assistance you have requested. E.g. if you are experiencing difficulty with budgeting,
the PSO will arrange for you to be given budget training.

What are the Criteria for approving proposals?

Proposals will be approved on a competitive basis using different criteria. The most
important criteria are:
Demand – there must be a need for the assistance being sought;
Scope – they must fall within the 11 thematic areas of TA1 support;
Mandate – the agency/body seeking support for a particular proposal must be qualified
to carry it out.

What are the 11 Thematic Areas of TA1 Support?

These cover the broad areas of: fiscal decentralisation, intergovernmental relations,
accountability and monitoring, and communications.


So how will DSP help you?

DSP will help you:
   ! If you want training to be able to carry out your duties and responsibilities;
   ! If you want to set up fiscal and other systems to consolidate decentralisation;



                                           19
   ! If you have innovative ideas and want to put them into practice;
   ! If you want the institutions, agencies and departments you work in to be
     strengthened;
   ! If you want to raise public awareness about devolution, and participation in it;
   ! If you want to improve service delivery and promote accountability.

DSP has been created to help YOU perform your role in the decentralized
government system. But in order to access the support it offers, YOU have to get
involved.

Contact your nearest Programme Support Office (see ‘Contact Information’) for
more information on how DSP can help you.




10. Mapping of Capacity Building Initiatives
TA1 is designed to provide support for capacity building and institutional development
of those involved with local government. Proposals for TA1 support have to be
appraised and refined by the Programme Support Offices (PSOs), and approved by the
Provincial and National Programme Steering Committees (PSCs). Once approved, the
PSOs will select the best capacity building/service providers from the public and
private sector. The criteria for selection will be optimal service provision.

In making decisions in all these stages – IP short-listing, TIP preparation, PSC approval,
service provider selection – it would be extremely useful to know what capacity
building initiatives have already been carried out/are underway in Pakistan.

Using ADTA resources, a mapping of recent and on-going capacity building initiatives
by a range of actors in areas relevant to TA1 was undertaken.

The ADTA Team conceptualized and finalized a questionnaire to collect the
information. With the assistance of supporting consultants the questionnaire was sent
to 150 organizations (government, private consultants, CSOs) throughout the country,
of which 55 responded positively. These were interviewed in greater depth, thus
allowing a mapping of 173 activities at national, provincial and local government
levels.

Three specific outputs emerged from this exercise:
a) User-friendly database;
b) Resource directory;
c) Activity report.
In addition, a set of useful material (manuals, training material, guidebooks,
brochures, training calendars, etc) was collected and compiled for future reference.

a) User-Friendly Database:




                                           20
The Capacity Mapping Database is structured to report information on capacity
development (CD) vis-à-vis a set of queries that can help make strategic decisions. The
database can generate reports by any of the following: type of CD activity,
organization, thematic area, geographic area or activity number.

The Database is designed as a ‘living document’, easy to edit and update. Because of
limited resources (time and finances), the mapping exercise could not
comprehensively cover all capacity building and institutional strengthening activities
undertaken at all levels throughout Pakistan. However it is expected that once the
DSP Programme Support Offices (National and Provincial) are operational, they will
continually identify CD activities (existing and new) at district, tehsil and union levels,
and ensure their addition to the existing Database.

b) Resource Directory:

The Resource Directory currently covers 173 capacity development activities. Indexes
based on Thematic Area, Geographic Location (District), Type of Capacity
Development, and Organization, are incorporated in the Directory to ease the access
of information. When the Database is updated, so will the Resource Directory.

c) Activity Report:

The report provides a brief summary of the design and implementation of the mapping
exercise, as well as a list of all organizations contacted, including government
organizations, CSOs, consulting firms, and donor agencies.

All these outputs are available at the National Programme Support Office.            They
should help the PSOs and PSCs in carrying out their assigned responsibilities.




11. Devolved Service Delivery Study
Devolution reform has been underway in Pakistan for over two years. While one hears
many opinions and comments about problems with the system, or conversely of the
improvements it has brought about, to date there has been negligible systematic
analysis of what it has achieved, what the problem areas are and, crucially, how it can
be improved?

The Devolved Service Delivery Study seeks to answer these questions – or at least, to
make a start in doing so. It was conceived by the World Bank, ADB and DFID in
recognition of the dearth of qualitative, empirical data about the impact of the new
local government system in Pakistan.

DSD examines the process of service delivery in a number of different sectors at the
district and tehsil level: health, education, water supply and sanitation, access to
justice, public expenditure management, political decentralisation and administrative
restructuring. For example:


                                            21
   ! Are stipulated practices being followed in each of these areas?
   ! Are the new incentives for improved service delivery that were supposed to be
     created by decentralisation being realized?
   ! Are they delivering what they are supposed to?
   ! What are the obstacles to proper practice and to the desired end results?

DSD provides an accurate picture of what is happening with service delivery at the
local level. Note that DSD examines the process of service delivery rather than actual
services delivered. This was a deliberate choice, because it was felt that two years is
insufficient time to assess the actual service delivery impact of devolution, or to
decide whether service delivery changes are due to devolution or to other factors.

But DSD does not stop at assessing current ground realities. It goes further by
identifying practical, incremental steps that can be taken by the districts to make
better use of the resources and opportunities available to them, and by the provincial
and federal governments to enable district governments to improve their service
delivery.

DSD findings will be useful:
   1) In providing an accurate representative assessment of the state of devolution in
       Pakistan. It will finally be possible to judge decentralisation not by hearsay
       and isolated anecdotes, but by a rigorous, systematic study.
   2) For all levels of government in identifying the adjustments and modifications
       they could make to improve the system.
   3) For donors operating in Pakistan, guiding them in the optimal allocation of
       donor support.

Update on DSD Progress

Ideally, the DSD survey would have been carried out across Pakistan. Constraints of
time and resources, however, necessitated its limitation to a number of representative
districts. Six districts and twelve TMAs were chosen for the DSD study. They were
selected to include all the provinces, include both urban and rural districts, and be
practically accessible to the DSD team. The districts selected were: Khairpur,
Karachi, Faisalabad, Bahawalpur, Qilla Saifullah and Bannu.

A lot of preparation work was done before the teams were sent out to the districts.
Staff from the World Bank, ADB and DFID together prepared a series of templates, one
for each sector being looked at in the study. The templates were basically a long list
of questions to be raised in each district. Before finalising these, an orientation
seminar was held with the consultants who would be conducting the actual survey, so
that their input could be reflected in the templates.

A team of local consultants was hired to go to the six districts. The consultants were
hired for their expertise in the different sectors covered by DSD, e.g. education
experts, water and sanitation, etc. Sheharyar Sarwar was appointed team leader, to
coordinate the entire survey. At regular points the consultants discussed their work
with and received input from ‘peer reviewers’ in the World Bank, ADB and DFID.




                                          22
The six districts were surveyed two at a time, with a one-week gap in between each
set of two. The first district to be visited was Qilla Saifullah in Baluchistan, and the
last Karachi.     On 30 September, the initial findings of the DSD survey, and
recommendations resulting from these, were discussed at a workshop in Islamabad
with local government representatives (Nazims and DCOs) from the six districts. The
workshop also discussed what should be done with the findings next.

Initial DSD Findings

DSD findings and recommendations are still being finalised. However, a very broad
generalization of some of the initial findings reveals that the record of
decentralisation implementation is very mixed. There are strong variations from one
district to the next, depending on factors like the provincial government’s relationship
with the District Nazim, that of the DCO and Nazim, the population and make-up
(rural/urban) of the district, and so on. Nonetheless, there are common problems and
common achievements.

Broadly speaking, the following problems appear to be common:
   o Provincial government control of district transfers and appointments.
   o Lack of responsiveness to the Nazim from the District Police Officer.
   o Abuse by police continues – and, in some cases, has worsened since
       introduction of new Police Order.
   o Local councilors are focused on delivering to their vote-banks, leading to over-
       stress on development schemes. Also lack of broad developmental vision at
       district level.
   o Poor revenue generation from local sources.
   o Public redress mechanisms such as the District Ombudsman and DPSC not
       operational.
   o Political interference at every level: rivalry between provincial and district
       governments, and between district governments and TMAs.
   o Oversight and monitoring mechanisms ineffective.
   o Overall lack of capacity at local government level, and often also lack of
       understanding.

On the positive, success side of decentralisation:
   o Some 154,000 local councilors have been elected – leading to many ordinary
       citizens (and especially many more marginalized groups) participating in local
       government and decision-making.
   o More effective monitoring of teachers and health staff is leading to improved
       attendance.
   o Tehsils are generating revenue from new sources.
   o Districts and tehsils are beginning to collect data for planning.
   o Purchase of medical equipment and supplies is taking place at the district level
       according to need – leading to improved healthcare.
   o Nazims with drive and vision can make a big difference.

In summary, much has been done to implement decentralisation in Pakistan, but much
more remains to be done.




                                          23
Note: The full findings of the DSD survey and its recommendations will be given in the
second issue of DSP Quarterly.




Contact Information

All the information given in this newsletter can be accessed from the DSP website:
www.decentralization.org.pk

Further information about DSP can be obtained from the website and from the PSOs:

       National Programme Support Office, Federal Bank for Cooperatives Building,
       Sector G-5/2, Islamabad. Tel: 51-9213400.
       E-mail: npso@decentralization.org.pk

       NWFP Programme Support Office, 56-E Canal Road, University Town, Peshawar.
       Tel: 091-9218203-4. E-mail: dspnwfp@hotmail.com

       Punjab Programme Support Office, 211-B Ahmad Block, Garden Town, Lahore.
       Tel: 042-5838003. E-mail: ddp_dsp_punjab@yahoo.com

       Sindh Programme Support Office, 01 Mezzanine Floor, Beaumont Plaza,
       Beaumont Road, Karachi. Tel: 021-9212982. E-mail: pdppso@cyber.net.pk

       Balochistan Programme Support Office, 15-B Chaman Housing Scheme, Airport
       Road, Quetta. Tel: 081-9202911.

Readers’ comments and feedback should be sent to Iffat Idris, Research and
Communication Coordinator, at the above NPSO address, or e-mailed to:
iffat_malik@hotmail.com.




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