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December 18, 2005 Sunday Ziqa’ad 15, 1426


The trail of death and destruction left behind by the Oct 8 earthquake in northern Pakistan shook the world. The last count was more than a hundred thousand people dead with 3.3 million rendered homeless. Never before had the country seen human misery of such magnitude. And the nation's response was spontaneous. Truckloads of relief goods lined up for miles heading to the affected areas. The world community's response was generous _ $6.2 billion. The Earthquake Reconstruction and Rehabilitation Authority is in place, while contractors have geared up for their slice in the task of rebuilding, which must begin soon after the snow melts. Local and foreign donors would keep an eye on how the money is spent, though everyone agrees it is a:


Momentous task ahead

By Afshan Subhoi

In this special report a team of Dawn’s economic journalists have made an effort to identify stakeholders and gauge their perception of the plans to monitor what perhaps is the biggest-ever public sector project undertaken since the birth of the country.

KARACHI: For millions of people traumatized by the Oct 8 earth quake in vast spans of Azad Kashmir and NWFP, life will never be the same again. Temporarily settled in largely sub-standard tents to pull through the biting, snowy winter, the survivors will have to be rehabilitated.

It took less than 10 minutes for the Oct 8 earthquake to kill at least 73,000 people, severely injuring another 70,000 and leaving 2.8 million people without shelter. It will take at least seven years to re-build the extensively damaged economic assets and infrastructure. Social service delivery, commerce and communications have either stood debilitated or completely destroyed. To those who survived the catastrophe there is no way that anyone can give them back all that they have lost or even clear the scars of those horrific memories from their minds. However, a carefully planned reconstruction plan that matches not only the requirements but also patterns of livelihood of the people of those areas can serve to rekindle the hope amongst victims. And that alone is the way to encourage people to believe that life must go on.

No one doubts the fact that the challenge of reconstruction and rehabilitation is humungous. It is not only the physical infrastructure that has to be reconstructed but the economy of the region has to be restored. But the silver lining is that the task of building afresh, can serve also as an opportunity not just for the northern areas but also for the entire country. Multi-billion public sector development projects can work wonders. Much, however, will depend on the quality of strategies evolved, institutions set in place, systems of check and balances and transparency of the whole exercise. It is equally important that people of the affected area have a sense of participation in the exercise through their representatives. They would also need some system to resolve complaints and counter complains. It is not enough for the ERRA to be clean and corruption free it must also be seen to be that way. The art of spending should become a science at ERRA.

The reconstruction work in earthquake affected, high altitude, mountainous, snow covered northern Pakistan will begin with the advent of the spring (early April). Three months are certainly too short a time to go into the details of rigorous minutely planned details for in an area that stretches for miles and miles. Still experts feel that that government is resourceful and if it so wishes it can come up with fairly workable strategies. “Bureaucracy will have to unlearn its ways to rise up to the challenge”, says a senior civil servant associated with the relief effort. And he adds: “Since time factor is crucial the feet dragging bureaucracy would have to be continuously shoved to move at faster pace”. On the other hand, there seems to be a bit of uneasiness in the corridors of bureaucracy towards ERRA being headed by a General. Let such concerns be addressed before the work begins, for as we all know, a half-hearted support of civil bureaucracy can jeopardise the pace of progress.

The government also needs to acknowledge the fact that never before in the history of the country, People of Pakistan have stood up in such harmony, in aid of their brothers in distress. Scores of stories are told of young and old, who left the comfort of their homes in cities in the South to lend a helping hand in the relief and rescue operations. Even private sector that has the ill reputation of being stingy could not have shown more large-heartedness in liberally donating to support the relief effort. By demonstrating a socially responsible attitude, the masses need to be kept informed about how and what is happening on the reconstruction front. “It is very important to enlist all tiers of elected representatives so that the responsibility is shared and people get a sense of participation”, says an economist. Besides a core group of dedicated experts can also be formed to assist the government and the authority. The desire of international donors, who this time round want ensure that every dollar donated is spent judiciously, must be respected. As the aids, grants and loans would come trickling down over many years, such transparency is crucial for unhampered flow of funds from abroad. But final accountability is with citizens of this country. For that a simple understandable quarterly assessment report should also be prepared. This will definitely go a long way in bridging the confidence gap between the rulers and the ruled.

While the earthquake exposed the soft belly of the gigantic administrative set up that was still groping in the dark when people took the lead in rescue and relief phase, the subsequent management of the operation, however, earned the government some credibility. The donors’ conference in Islamabad, though criticized by some quarters, did achieve its objective of raising immediate funds for long drawn process of reconstruction. The argument that the government must also try to divert internal resources committed to unproductive or less productive heads to the task at hand is not baseless. There are areas such as recurring administrative cost that probably need pruning. This may not be the best of times to shed the extra flab in both civil and military bureaucracy, but a review of spending is in order. The government must also check leakages of public funds. Divergence of funds from public sector development programme (PSDP) of other regions is not advisable keeping in view the need for such expenditure on those sectors as well.

For once it has to be admitted that the standard of damage assessment report prepared by the Federal Bureau of Statistics, presented at the donors conference, was impressive. It shows that if the government wants it is capable of developing a referable data base within a short span of time in the most unusual of circumstances. The report was prepared with the assistance of World Bank and ADB experts. It has quantified the loss to capital assets and social infrastructure in the affected regions (some tables and graphs are used in this report). The report did serve as a reference material for donors. The financial support pledges ($6.2 billion) by the international community exceeded the initial requirement assessment of $5.2 billion. The total sum pooled in by the country’s rich and poor in the President’s Earthquake Relief fund has not been reported. One figure was noted at Rs7.2 billion, donated by 222 business houses.

It has to be said that the current focus on AJK exposed the duality of government’s Kashmir policy. Over the years, it continued to champion the Kashmir cause, but in doing so it did not fully assess and direct resources to the valley’s development requirements. The region’s economy was not integrated in the national economy. AJK is a lot more dependent on agriculture (40 per cent of GDP) and service (50 per cent) and less on manufacturing (10 per cent). In industry small scale manufacturing has been dominant. The economy was also dependant on remittances from people working in urban Pakistan besides those working in the rest of the world. There are perhaps two million Kashmiris employed in major cities and they send about $500 million a year to their families. This is equivalent to 25 per cent of the GDP. Three forth of the areas population depends on agriculture, about 10 per cent on manufacturing and 15 per cent on services. The reconstruction has given us a chance to make up for the past neglect and make AJK comparable to other developed regions of the country in terms of public facility provision, social and physical infrastructure.

“With such a gigantic project in hand President Musharraf’s government should avoid divisive issue such as Kalabagh Dam and keep its attention focussed on reconstruction and rehabilitation”, a senior economist from Islamabad advises. “I wonder if there is any possibility to make ERRA an exemplary institution and not a closed elitist club totally out of bounds for people and media?” wondered an economic journalist.

Dr S.M. Nasim a senior economist recently pinpointed a very important aspect: “A serious danger is the threat to the future livelihood of those affected by the earthquake for which preparations are needed ........ About 25 per cent of the Azad Kashmir GDP and four per cent of the NWFP’s GDP are estimated to have been lost due to the earthquake. The immediate task of the planners, apart from rebuilding essential physical and social infrastructure such as roads, bridges, schools and hospitals must be to provide employment to rebuild their lives and assets with their own and community’s efforts. In contrast to other anti-poverty interventions whose benefits often accrue largely to non-poor, employment assurance programmes have the advantage of self-targeting. In the past, employment-centred public works programmes in Pakistan have not been successful because of their capture by patronage politics. With greater participation of the people and the NGOs it should be possible to avoid leakages this time around”.

An independent economic research organization of Karachi, Social Policy Development Centre (SPDC), brought out a special report to gauge the possible impact of earthquake and reconstruction on the national economy. Here is an interesting excerpt from its findings: “The earthquake could initially shave off 11/2 percentage point from economic growth. In absence of reconstruction, this initial hit would lead to permanent losses to levels of capital stocks, consumption and income that are substantial. Second the rebuilding effort of 5.8 billion dollars over a five-year period will bring the economy back only half-way to the path that would have prevailed in the absence of the earthquake. Third, the rebuilding effort will be inflationary in the short run and could add two percentage points to the rate of increase of consumer prices in 2005-06 and 1 percentage point the following year.”



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