IN its current budget, Punjab has allocated a substantial sum of Rs2.89bn for improving its livestock markets at the tehsil level, primarily funded by the International Fund for Agriculture Development.

Critics ask: should governments use foreign funds for their own political mileage, or for private sector-led growth, which brings sustainability to such schemes.

Critics of the allocation, which is basically a loan from IFAD under the Livestock Access to Market project, maintain that governments use such funds to make the budget look sound and the sector as a priority, without quite often, diverting any funds to it. They tend to forget that sometimes the project and all facilities created under it are left to rust.

Punjab hopes to bring modern facilities — better weighing, veterinary services and documentation — to all its livestock markets at the tehsil level

Huge under-utilised infrastructure at these markets stand witness to changing political priorities of the governments. The country is left with additional loans, with marginal (or no) benefit. The critics cite many projects that have been forgotten as they either entered the arena of diminishing political returns, or the governments changed, or even a top man in the department was transferred.

The advocates of the project, however, think that with Rs2.89bn, the province hopes to bring modern facilities — better weighing, veterinary services and documentation — to its livestock markets that operate at the tehsil level. These facilities, once created, will be there for all. They will bring efficiency, transparency and competitiveness in these markets and benefit farmers and agribusiness in the province.

At present, there are hardly any weighing facilities at these markets. All animals are sold by visual assessment, which neither factor in the health of the animal, nor its age, exact weight, or productivity. In the absence of additional benefits for such investments, farmers tend to ignore health and nutrition of the animal, weakening the entire breed. That is precisely the area that the government is focusing on.

Even if the facilities are gone and not renewed in future, the farmers will be better aware of the utility of these factors. It will have a multiplier effect as veterinary facilities at the markets will ensure that no animal carries any disease out of these centres, as they currently do. With different animals put together in these markets, no one knows which is carrying what disease. All animals would be screened and documented before being sold — including those that are not sold and returned home.

Undeterred, the critics, however, maintain that the governments have gotten it conceptually wrong. It is not for the government to create such physical facilities, especially without creating an enabling legal environment and correcting the regulatory regime. For example, selling animals on the basis of weight would need a new law, and so would health screening and documentation. Where are those laws?

That is why it is important for the government to create a legal framework that will modernise animal trade and facilitate the private sector in creating such facilities. Only then will it be able to sustain such initiatives and develop business according to new realities.

Currently, all markets are regulated, and in some cases controlled, by the government under the Local Government Ordinance, which binds the managers to provide a hygienically clean atmosphere. This is not happening because government officials control these markets according to their own political and official mandate, and not based on business priority. That is why such initiatives become more of a source of corruption.

For these reasons, it is important for governments to prepare plans that locate missing links in the current market regulatory regimes and strengthen them, instead of adopting projects conceived by lenders and based on foreign realities.

Additionally, all foreign-funded projects entail huge consultancy services that cost up to 50pc of the total lending. The consultants, unaware of local realities, also lose their utility and become a financial drag. That is why it is important that governments prepare their own plans and then go to lenders for helping them. There is no doubt that local markets need improvements. But before the improvement of markets, the sector itself needs an enabling environment.

For these reasons, it is important for the government to have a holistic view of the sector, with all its components, including markets, supplementing each other. This is even more important because the livestock sector, according to the Economic Survey of Pakistan, has become 11.7pc of GDP, leaving its parent sector — agriculture — reeling at 9.3 per cent. With these statistics, it has become too important to be left alone to foreign funding.

Published in Dawn, Economic & Business, June 30th, 2014