KARACHI, Aug 30: The World Bank considers water scarcity and regional divide in Sindh a threat to development in the province. A primary survey of key stakeholders of the province carried out by a World Bank team in December 2004 expressed surprise that the issue of divergence and inequality within the province was not viewed as a threat to the development, despite the large economic, ethnic and political polarization in Sindh.

While the number of poor is growing in both the urban and rural areas of the province, the World Bank mission found the poverty incidence particularly high in rural areas. In the year 2001-02, one out of every two persons living in the rural areas was below the poverty line, compared to one out of every four persons in the urban areas.

There is also a considerable difference in the socio-economic indicators between Karachi and the rest of the urban centres of Sindh; the difference between the urban centres seems to be less than that between urban and rural Sindh.

Majority of the stakeholders with whom the bank mission interacted last December singled out ‘poor governance’ as the most important developmental challenge facing Sindh. Corruption and law and order, which are derivatives of a weak governance system, emerge as the second and third most critical challenges to the province. Infrastructure and public investment related variables are seen next set of challenges that needed urgent attention.

Water shortage, the World Bank mission finds a growing concern, is not considered as one of the top five challenges. The World Bank attributes this perception to recent improved water situation and “slight urban bias” in the survey.

As many as 18 economists and consultants are engaged with the World Bank and the Asian Development Bank mission to prepare a Sindh economic report sometimes next month. But in their “some initial analysis and preliminary recommendations” they observed that the coalition government appeared to have been burdened by “political stalemate” and “has found it difficult to focus on developing the type strategic vision, action programme and implementation drive”, which made Sindh a leader in implementing reforms in the earlier years. The World Bank blamed “the sustained bureaucratic inaction” and lack of attention to business related issues for creating a perception of severe policy uncertainty that had heightened the distrust between the business community and public sector institutions.

While noting a “marked decline in the governance standards and the quality of public services”, the World Bank mission found that progressive policymakers, resilient business community and activist civil societies of Sindh have given any hope of creating a more prosperous Sindh.

Sindh, with a population of 35 million and a per capita income of $500, has historically been “one of the most prosperous and developed province of Pakistan”.

But in its recent survey, the World Bank mission counted 13.6 million people living below the poverty line in Sindh. This constituted 40.4 per cent of the population in 2001-02 and is more than 100 per cent of 6.5 million poor counted in Sindh during 1993-94. During the same period, the number of people in middle and upper income reduced from 211.1 million to 20 million.

“If the current poverty trend persists, the number of poor may increase by 8.3 million and the number of middle and upper income may contract by 3.7 million.” What surprises the World Bank mission is that in most of developing countries, the increase in number of poor is attributed to sudden natural disasters, wars and conflicts, but what is worrisome in Sindh is that this has happened during peace time. But the mission gives some allowance for rising rural poverty to drought that gripped the province from 1999-2000 to 2001-02.

The World Bank report notes that historically Sindh enjoyed the lowest unemployment rate among all the provinces. But in recent years, unemployment has begun to increase. It quotes Labour Force Survey according to which the rate of unemployment in Pakistan declined to 7.7 per cent in 2003-04 from 8.3 per cent in 2001-02. But in Sindh the unemployment rate has increased by 0.8 percentage points — from 5.2 per cent to six per cent. Commensurate with poverty numbers, the unemployment rate increased faster in rural areas than urban areas. In absolute scale, the World Bank mission estimates the increase in unemployed persons at 130,000.

“While the growing unemployment is a concern itself, what is more worrisome is that it is happening at a time when other provinces in Pakistan like Punjab are creating more jobs and employment opportunities than the net addition to their labour force.”

Pakistan’s economy stagnated during the 1990s, but Sindh economy did worse than the national economy. The provincial GDP grew by only 2.2 per cent per annum during the period between 1990-91 and 2001-02 when Punjab economy maintained an annual growth rate of 3.9 per cent.

The economy meltdown affected all sectors of the economy but agriculture was most hard hit and shrunk by almost 20 per cent during 1998-99 and 2001-02. The drought hit hard the agriculture sector and also hit non-farm sectors like livestock and fisheries. The World Bank holds drought responsible for increasing the rural head count poverty from 31.5 per cent in 1993-94 to 51 per cent in 2001-02.