ISLAMABAD: The government is seeking additional financing of $19 million from the World Bank for the economic revitalisation of Khyber Pakhtunkhwa and the Federally Administered Tribal Areas (Fata) to lay the foundations for the future development of select economic sectors in the region.

A World Bank document said the government’s request for additional financing of the project was being processed. The project is supported entirely through the Multi Donor Trust Fund (MDTF) for KP, Fataand Balochistan and its activities cover all the districts of the KP province and all the agencies of Fata.

The project, which became effective in October 2011, was performing reasonably well in both KP and Fataand has provided tremendous support for creating jobs and rehabilitating the region’s economy.

Towards the end of 2016, the project has helped creation of 8,834 direct jobs by supporting more than 1,601 small and medium sized enterprises including private sector schools, medical units, and micro-hydro power generation plants.

The key economic sectors in KP are agriculture, minerals and extractives including gemstones, tourism, manufacturing and textile weaving.

Under the additional financing, the project activities will be scaled up to provide matching grants to the enterprises in those Fataagencies – Khyber Agency, Orakzai, North Waziristan and South Waziristan – which are experiencing an influx of returning temporarily displaced persons (TDPs).—Staff Reporter

Both in KP and FATA, priority will be given to women-owned SMEs to encourage their participation in the economic rehabilitation efforts. The new financing will also support the activities that will lay the foundations for the development of select economic sectors of the region such as tourism, agribusiness and marble.

As a result of the recent conflict, about 20 per cent of the population of Fatais currently displaced. Well over half of its population was displaced at some point in the past five years. Amidst this humanitarian crisis, the lack of employment opportunities has consistently maintained the high rate of poverty in the region and has also acted as a driver to increase the militancy among the region’s youth.

While the region is somewhat stable now, resources are required to improve the socio-economic indicators given the high return rates of TDPs and an immediate need for the economic rehabilitation in the previously inaccessible agencies and areas of FATA, including parts of the Khyber Agency and North Waziristan.

The region’s businesses face many challenges including weak legal and regulatory framework, interrupted power supply, lack of access of finance, unavailability of the skilled labour force, poor road networks, dilapidated infrastructure in remote districts, high cost of doing business, and security challenges, the project document says.

On account of these problems, the current level of economic activity and the overall economic growth is well below its potential. Appropriate interventions can help address or mitigate some of the constraints, correct the market failures, and contribute towards enhancing the competitiveness and productivity of the key economic sectors, the World Bank document notes.

Published in Dawn, February 23rd, 2017