KARACHI: IFI loans and failure of urban development
By Arif Hasan
BETWEEN 1976 and 2003, the government of Pakistan has taken loans from international financial institutions (IFIs) for urban development projects. These loans amount to US$ 1,472.44 million (Rs 88.346 billion) and most of them have been for water and sanitation projects. They have multiplied over the years due to the devolution of the rupee and interest. These loans were identified through technical assistance for which an additional $16.95 million (Rs 1.017 billion) were provided. Technical assistance includes development of human resources and the capacity building of relevant government institutions.
In spite of these huge investments, infrastructure and environmental and socio-economic conditions in the urban areas of Pakistan have deteriorated considerably. The functioning of government institutions has also declined both in terms of efficiency and accountability. The Asian Development Bank’s own 1996 evaluation of the Karachi Urban Development Project and Peshawar projects terms both of them as unsuccessful, except for the Orangi Project (termed as partially successful) which was done in association with the Orangi Pilot Project. For the development of projects through these huge loans, foreign consultants were employed and the loans paid for them. Studies by Pakistani professionals and NGOs have identified the weaknesses of these consultants and the problems with the methodologies that they have used in planning and in the processes of project implementation and monitoring.
Of the $1,472.44 million loans, $653.89 million (Rs 3.92 billion or 44 per cent) were taken for various Karachi projects which included traffic and transport related programmes as well. As a result of these loans, the Karachi Water and Sewage Board (KWSB) owes the ADB more than Rs 42 billion. The servicing of these loans is done by making deductions at source in Sindh’s annual development budget. Thus, both urban and rural Sindh service these loans. Loans taken for infrastructure projects in the rural areas of the province are much larger and have caused serious ecological damage and social and economic stress to local communities.
At present a number of technical assistance programmes and studies are being carried out (or have been carried out recently) by IFIs for Karachi. These studies are paving the ground for a new cycle of loans even larger than the previous ones. These studies include the World Bank/ADB Public-Private Infrastructure Project; the JBIC’s Rehabilitation of Hub and Pipri Treatment Works; the JBIC’s study for the Revitalisation of Karachi; the ADB’s Mega-City Development Project; JICA’s Water Supply and Sewage Master Plan Preparation; JICA’s Passenger Trip Study for Karachi for the preparation of a transport plan; the World Bank’s “Turn Around Programme” in support of operation and maintenance of the water and sewage system; and JETRO’s study for the future development of industry. The city government meanwhile is preparing a master plan for the city of Karachi and is also turning the sewage-carrying-nullahs of Karachi into box culverts to overcome the sanitation problems of the city and the KWSB has initiated its own reform process.
There is a direct link between most of the studies and projects that are listed above. However, there is no coordination between them and many of the consultants engaged by the different IFIs are not aware of what exactly the others are doing. Many of the issues raised in the IFI reports so far do not find place in the terms of reference for the Karachi Master Plan consultancy and as such they are not a part of a larger planning exercise. Many of these plans are duplication of each other and of government initiatives. Reading through these documents one gets a sense of déjŕ vu.
There is serious concern in academic, professional and civil society circles that these studies, for which we are paying, will lead to new loans and a failure to meet objectives. It is feared that as in the past, the only beneficiaries of this technical assistance and loans will be international consultants, contractors and the IFIs themselves.
Karachi’s professionals, academics, NGOs, concerned citizens and civil society organisations have voiced concerns about many of the previously IFI funded projects and of government funded projects as well. A review of the projects they have objected to clearly demonstrates that they have always been right. Some of these projects include the Metroville Project where it was pointed out that the target population would not be reached through the proposed methodology; the ADB funded the Greater Karachi Sewage Plan where it was pointed out that there was a conflict between the plan and where sewage actually flowed and was disposed of the Baldia Sewage Project where it was pointed out that the Rs 1,300 million investment was duplicating much of what already existed; the Lines Area Redevelopment Project where it was predicted that given the plan and its implementation process, the area would turn into a physical and social slum and would benefit neither the residents of Lines Area and nor the city of Karachi; and the Karachi Mass Transit Project where objections were raised which have been justified by the research studies of other cities carried out by international academic institutions.
Similarly, the objections raised to the Lyari Expressway are already proving to be correct given the unplanned changing land use pressures on the corridor and its adjacent areas. Had there been serious public consultations, it is possible that the expressway would not have been a huge wall dividing the city; it would not have displaced communities who have lived in the corridor for more than 100 years; it would not have disrupted the schooling of over 26,000 children and deprived thousands of persons of their jobs. In addition, the consultations would probably have declared the 18th century Jewish cemetery, the Hindu cremation grounds and the 19th century dhobi ghats as protected heritage, a heritage.
If the failures of the past have to be avoided then political decision making regarding development in general, and development projects in particular, has to be informed. Given the wealth of information, knowledge and practical experience available with Karachi’s academic institutions, professionals, organized community networks and NGOs, it is essential that a system of consultation between them and the decision-makers is established. This is something that the new nazim of Karachi has also mentioned in a number of talks that he has given to the citizens of Karachi.
Every Karachi plan and proposal at the conceptual stage should be advertised along with its financial implications and displayed at an appropriate place that is easily accessible to the public. Consultations on the conceptual plan should be held with interest groups and relevant academic and civil society organizations. Concept finalization should take place only after such consultations and a steering committee of interest groups should be appointed to oversee the design and implementation of the project. One government officer should be responsible for overseeing the project from its inception to its completion. Accounts should be published every three months.
Establishing this process will require considerable political will. However, once established this process will not only ensure accountability and transparency but will also develop a sense of belonging and involvement among citizens. It will help ensure that planning takes into consideration the requirements of Karachi’s low and lower middle income groups who are currently marginalized from the planning process. Much of the current mess in Karachi is the result of this marginalization.
