ECONOMIC DEVELOPMENT OF FATA WITHIN PAKISTAN’S ECONOMIC CAPACITY

Introduction

1. Situated midway along Pakistan’s border with Afghanistan is a wedge of rugged terrain, dotted with sparsely populated valleys, home to a dozen Pakhtun tribes and hundreds of clans and sub-tribes. This mountainous land, known as the Federally Administered Tribal Areas (FATA), is made up of seven ‘political agencies’ and six smaller zones, called ‘Frontier Regions’, which separate the tribal agencies from the rest of the country. On three sides, FATA is bounded by the ‘settled’ provinces of Pakistan. The Durand Line forms its western border. In the 19th century, the area held great strategic importance, serving as a buffer between the British colonial government of India and Tsarist Russia. Starting with the 1979 Soviet invasion of Afghanistan, the turmoil and instability across the border spilled over into FATA.

2. FATA has remained one of the most insular and isolated corners of the country cut off from the mainstream of Pakistani society. Increasingly impoverished and marginalized, they have become an easy pray to terrorist elements. The overall economic situation of the region has remained below normal level due to governmental policies coupled with overall economic decline in the country due to the after effects of GWOT.In the succeeding paragraph an attempt has been made to analyze economic potentials of FATA with a view to initiate an economic development drive in the region. The aim remains to bring facilities of life to its people eradicating social deprivation.

Aim

3. To carry out a detailed analysis of present eco sit of Pakistan, with a view to recommend measures for a sustained economic development process within Pakistan’s economic capacity to spearhead an economic development process in FATA in specific and Pakistan in general.

4. Sequence. The research paper haws been divided into following major parts:-

Part – I

Pakistan Economic Review

Problems of Pakistani Economy

Part – II

FATA Economy

Agency wise economic potential

Recommendations to improve FATA Economy

c. Part-IV

Budgetary Allocation

Recommendations for Sector Wise and Consolidated Budgetary Allocation

Part – III

Economic Developments Models for Development of FATA

Reconstruction Opportunity Zones (ROZs)

FATA Sustainable Development Program (SDP)

GCC – EU Friends of FATA Fund (FFF)

Recommended Framework

PART – I

5. Pakistan Economic Overview. Pakistan’s economy has been fluctuating throughout its 55 years history. The deplorable state of the economy was the result of many years of economic mismanagement and imprudent economics policies of the successive governments. The tragic events of September 11 and their aftermath further exacerbated the already difficult emerging situation on the global economic scene [1] .

6. Problems of Pakistani Economy. Few of the major ones are:

Political Instability. In Pakistan governance is characterized by uncertain policies, ineffective implementation, limited accountability to clients, regulatory overhangs, and failure of the legal system to provide timely recourse.

Lack of Long Term Planning. Despite the establishment of planning commission in 1953, there has not been any meaningful planning. Futuristic needs/trends have not been catered for by so called planners.

Nationalisation versus Privatisation. In the past 60 years the country has oscillated between the two options and even now the privatisation drive is marred by personal interests and lack of transparency.

Bad Governance. Usually competent/professional people have not governed the state-controlled industries. This had pronounced effect on overall poor output of these units.

Poor Banking System. Our banking system has not supported the growth of economy. Money of innocent people deposited with these banks has been loaned to influential people that now stand defaulted.

Large Trade Deficit. In 2009, 80% of our imports were financed by our export earnings. This ratio has come down to only 50%, it may go up to 60% but a gap of 40% of financing needs in order to keep with the import level still exists [2] .

Fiscal Deficit. Pakistan’s government takes away 20% of national income as its own. 80% is left in the private sector and 20% in the hands of the government is spent on defence, debt servicing, development on education, health, general administration etc [3] .

Declining Foreign Trade. In 1990, Pakistan’s share was 0.2% of the world trade. After 20 years it has come down to 0.12% in a very buoyant world economy [4] .Pakistan is stuck with only a few commodities – textiles, leather, rice, sports, goods and the surgical goods.

Poor Economic Indicators. Pakistan’s indicators in literacy, infant mortality, in access to water supply, primary enrolment ratios are more comparable to Africa rather than to the countries of similar per capita income.

Energy Crisis. Our industry is at a disadvantage that they get the orders from foreign countries but they cannot execute the orders because there are electricity outages and in addition of cost of production becomes higher than international competitors.

Law and Order Situation. In 2007, Pakistan was one of the most favourite countries among the international investor community [5] .However, in two years time we have missed that boat due to alarming law and order situation in the country.

Faulty Taxation System. Indirect taxes account for about 80 % of tax revenues, with nearly half of this coming from trade-related taxes [6] . This narrowness of the tax base can be traced to weak tax administration.

Smuggling / Black Economy. Independent economic analysts estimate an annual direct revenue loss of 25 billion rupees (US$540 Million) to the government because of smuggling [7] .

Export / Import Imbalances. This is usually over US$ 3-4 billion per annum. The reason is heavy production cost and our inability to convert raw materials into finished goods [8] .

Heavy External Debt. With over US$ 32 billion, as external debt, even our future economic development is at stake [9] .

Population Growth. This over hanging liability is a constant disadvantage to our overall economic growth. The effects of our economic growth are eaten away by the rapid growth of population [10] .

Unrealistic Economic Policies. The absence of competent economist in planning departments of the government has adversely effected the economic growth.

Human Resources Management. Pakistan expenditure on social development sector has remained poor. The talent is going to foreign countries due to mismanagement [11] .

Exports. The Rapidly growing competition in international markets coupled with improved quality standards has resulted in substantial decrease of share in foreign trade.

Poor Literacy Rate. Pakistan’s primary and secondary school enrollment rates are considerably low. The average adult literacy rate is less than 50%. [12] .

PART II

FATA ECONOMY

7. The rural economy is chiefly pastoral, with agriculture practiced in a few fertile valleys. The local economy operates on an informal basis and is undocumented, since few laws providing for the regulation of economic activity have been extended Most households are engaged in primary-level subsistence agriculture and livestock rearing. Some are involved in business and trading, or find employment in the small-scale commercial and industrial sectors. Those unable to earn a living at home migrate to other parts of the country or travel abroad in search of work. Women take active part in agricultural activities, collect fuel wood and fetch water, in addition to attending to household work and family duties.

8. Agriculture [13]

Small landholders make up the majority of farmers and engage in agriculture mainly at the subsistence level, characterized by the underutilization of land, poor productivity and risk- adverse behavior.

Only 7 per cent of the total geographic area of FATA is cultivated, with another 1 per cent recorded as fallow, accounting for roughly half of all potentially cultivable land.

Overall production and per-hectare yields in FATA compare poorly to figures for the country as a whole. The yield per hectare for wheat in FATA is just 38 per cent of the national.

9. Poultry and Livestock [14]

Livestock and poultry are an essential component of the rural economy, providing income support for most farm households.

The size of the herd depends on the household’s capacity to purchase animal feed in the winter and spring months, when natural fodder is thin on the ground.

Some 4.9 million ruminants and 6.7 million birds are being reared across FATA.Fish farming is practised mainly at the household level on wasteland and marginal lands.

10. Commerce and Trade [15]

Commerce and trade form a major source of livelihood in the tribal areas, second only to agriculture.

Historically, and particularly during the 1980s, the region was a major centre for opium production and trafficking. Today, the transit trade with Afghanistan provides employment for the local population.

11. Industry [16]

Industrial activity is restricted primarily to small, owner-financed units, operating without government oversight

Some mineral extraction is taking place in various agencies, using outdated technology and antiquated methods.

Many seek employment as short-term unskilled labourers or enlist in the local security and paramilitary forces. Those who are able to travel find work in cities across Pakistan as well as in the Middle East.

There is considerable local expertise in the manufacture of weapons but production is not regulated and export to the settled areas is illegal.

12. Forests [17]

Forests are an integral part of the rural economy, playing a significant role in local livelihoods particularly in the mountainous regions.

The forest cover is declining rapidly as a result of timber extraction, prolonged periods of drought, uncontrolled grazing, and pressure from fuel wood and fodder collection.

Over-exploitation has also affected the natural regenerative capacity of forests. With forest resources rapidly disappearing, the environmental services provided by natural ecosystems have also diminished.

Rangeland and pasture areas are in a depleted state, partly from overgrazing but also because of extended periods of drought.

13. Economic Potential Available. A variety of economic potential exists in the tribal areas depending upon the population, land, geography, and vicinity of the Afghan border. These will be covered as per the existing administrative set up of the areas.The agency wise economic potential is covered in succeeding pqrqraphs [18] :-

15. Dir, Swat, Bajur and Chitral Agency. As per the old records the major source of economy has been Agriculture. Where so ever agriculture is possible majority of the population depends upon agriculture, but the produce is not sufficient to sustain the complete population therefore grain and certain other items have to be imported from other parts of the country. The second major source of economy has been cattle farming. It is still common in all the highland country and people involved in this profession spend a nomadic life shifting their abode in search of pastures and with the severity of weather. Mineral to include Iron and Copper are also found in the Khashkar valley of Bajour Agency, these are being mined in certain areas and few villages are totally employed in this profession. Inferior Cotton Carpets and Shawls are also made in these areas through which a number of families are sustaining their livelyhood. Forests have been another major source of income and have contributed in the overall revenue generation from the area. Deodar forests of upper Dir valley are a famous source of income to thousands of people. Although these are protected by Forest department yet certain rights have been secured by the local population to sustain their livelihood.

16. Mohmand Agency. The Mohmand country comprises barren hills and a little of fertile alluvial plains between the doab of the rivers. Major produce is Grass, Dwarf Palm, Firewood and charcoal. But this produce is meager enough to sustain the population; therefore reliance of majority of the population is on trade through Khyber Pass from Afghanistan. It has been replaced by smuggling of drugs, weapons and other electronic item of Afghan transit trade which passes through Khyber pass.

17. Khyber Agency. The Khyber Pass is the great northern route from Afghanistan into Pakistan and India, while Kurram and Gomal Passes form intermediate communications. Agriculture has been the major source of sustenance besides trade. A limited cottage industry of gun manufacturing also exists in Bara area of Khyber Agency. Now a days smuggling through Afghan transit trade is the main stay of the economy along with drug trafficking and gun running. Cattle farming as a tradition have always been supporting the tribes in Khyber Agency. The Mullagori marble deposits are one of the largest marble deposits of the world. Other mineral deposits in Khyber Agency include soapstone, limestone, dolomite, ciliate, silica sand, barite, mica, and graphite. Marble deposits are found in Mullagori, Sultan Khel, Ghundai Sarand and Loe Shalman. Soapstone is the second most important mineral of Khyber Agency. The major deposit lies 7 kilometres from Jamrud Bazaar. The mineral production figures for the year 2003-2004 include 7260 tons marble, 1,82,160 tons of lime stone, 1200 tons of soapstone and 110 tons of barite. Khyber Agency has a very low industrial base having only three industrial units of significance including the Bara Ghee Mills and two cigarette factories namely One More Cigarette Factory and Tatara Cigarette factory with a total employment estimated at 525 persons. There are other small silk processing units at Alam Gudar Bara, which is basically a cottage industry.

18. Orakzai Agency. Named on a pathan tribe inhabiting the Northern slopes of the Samana range and the adjoining valleys of Tirah. The major source of income is as per Khyber agency agriculture; however a small industry of gun manufacturing also exists in the area. Poppy cultivation, drug smuggling has gained momentum in these areas over the last two decades.

19. Kurram Agency. The Agency has an area of about 1,278 square miles. Agriculture is the major profession in the area. Wherever water is available the soil is highly productive. Major crops are maize, wheat, rice, barley and clover. Apples, pears, grapes, cherries, pomegranates, peaches, and a fruit peculiar to the Kurrram and Tirah, known as the “Shalil” also grow in abundance and are one of the huge income earning sources. It is said that famine is unknown in Kurram. The agency is accessible from Kohat by the Khushalgarh – Kohat – Thal branch of the Railway and road link also exists. Forests of Blue Pine and Chinar contribute to the economy of the agency a great deal.

20. North Waziristan. The agency comprises of four large and fertile valleys. These valleys are irrigated by the Kurram, Tochi and Gomal rivers respectively. The lands of the valley are extremely rich, and grow heavy crops of maize, rice, sugar cane, wheat. Agriculture is the major backbone of the economy however smuggling also brings a lot of cash in the agency. Forests of Mulberry, chinar, willow, gurgura and wild olive are also abundant on the slopes of the mountain which can be exploited to bring huge finances in the area. Fruit orchards of apple, apricot and peaches also contribute to the economy of the agency. Cattle forming is also a major source of livelyhood in Pashtoon tribes of the agency.

21. South Waziristan. The lands which lie close to the numerous streams are well cultivated; their extent is insufficient to produce grain for the whole population. Wheat, barley, rice, maize and millet are the chief crops; these are often cut when green for fodder, springing up again before the harvest. Fruit orchards of apple and peaches are also contributing in the economy of the area. The chief mineral product is iron, which is found and smelted in many places, especially in the hills above Makin. Forests include wild olive, gurgura and dwarf palm trees. Mats and ropes are made of the dwarf palm by the men and the women weave rough cloth from wool and blankets from goat’s hair. Cattle farming is also very common in many a tribes in the area specially the Ghilzai Powindas. Trade has also been a famous profession in the area due to the link through Gomal Pass. It still continues with an amalgamation of smuggling. In certain areas of the agency poppy cultivation has also been reported, which is being controlled now days.

Recommendations

13. The following is recommended to fasten the rate of development work in FATA to boast its economy and bring it in line with the settled areas of Pakistan:-

Development Plan. The Central Government should allocate funds and provide loans to tribesmen organisations and individuals. The loans should be provided on minimal mark up rates and private and public sectors should be encouraged to assist the tribal organisations to develop viable and resource generating economic ventures of their own [19] .

Share in National Finance Commission (NFC) Awards. NFC Award is based on the population of each province. In view of government’s drive to bring FATA into the national mainstream, it is imperative that it be included in the NFC Awards as a separate entity.

Transparent Financial Management. A system of transparent financial management should be evolved with participation of general public. The authority of auditor general should be extended to FATA and proper audit of accounts of all government departments should be carried out.

Trade Sector. The international efforts for re-construction in Afghanistan and opening up of trade routes to CARs (Central Asia Republics) offer great economic opportunities for Pakistan with an annual trade which may fetch up to one billion dollars. Creation of environments conducive to trade will greatly help in improvement of economic situation. Following measures will help in this regard:-

Opening of Trade Routes. Formal trade routes between Pakistan and Afghanistan should be opened on priority e.g. Ghulam Khan Route between Miranshah and Khost

Custom Regulations. Relaxed custom regulations to encourage legalization of informal (smuggling) trade.

Tribal Chamber of Commerce. The establishment of a Tribal Chamber of Commerce would enable the tribal traders to have better interaction with the national and international markets.

Tribal National Bank. It should provide financial services, counselling and planning ability necessary to free the tribesmen from the isolation of an economic island in which they had been living for centuries.

Agriculture Sector [20] . Agriculture sector can provide a substantive base for economic development. Following measures are recommended in this regard: –

Adopt the ‘pocket area’ approach to focus on the production of specific crops in identified production zones.

Improve water management practices by introducing efficient water use technologies, and constructing small dams, ponds and reservoirs.

Reclaim cultivable wasteland through dry land agriculture. Introduce the use of bio-pesticides.

Irrigation network needs to be developed by construction of small dams, check dams and channels.

A land settlement system should be evolved on modern lines.

Processing facilities should be provided to ensure proper packing and canning of fresh and dry fruit for international markets.

Grafting of wild olive trees with fruit bearing species. Fruit culture and off-season vegetables with free fruit saplings and expert’s.

Model fish farms have also been constructed to encourage locals to adapt to the modern systems of enhancing their income.

Forestry Sector [21] . Forestry sector needs to be explored for economic improvement in the area. Following steps are recommended to be undertaken:-

Launching of a conservation campaign for the forests.

Encouraging plantation of new trees by provision of free saplings.

Establishment of checks for smuggling of timber to Afghanistan.

Modernization of timber industry in the area.

Provision of assistance to locals for olive grafting and plantation of oaks and chalghoza pines.

Live Stock Sector [22] . Following steps are recommended in this regard: –

Improve access to services, including animal health services.

Increase the number of female livestock extension workers.

Make feed and fodder widely available.

Improve the condition and productivity of rangeland, in collaboration with research institutions and the forest department.

Introduce new species of fodder, in collaboration with research institutions, farmers, tribes and herders.

Enhance livestock production through breed improvement.

Set up marketing facilities for farmers.

Improve rural infrastructure and access to markets.

Declare ‘pocket areas’ for dairy production, with linkages to agro industry for marketing and service delivery.

Ensure that savings and credit services are available to support micro enterprise and on-farm income generation activities.

Enable farmers to improve marketing by providing information.

Mobilise local communities, and establish linkages with public- and private-sector services for technical assistance and inputs.

Encourage and support the establishment of livestock- and poultry-based industry.

Develop a database, carry out resource mapping and set up information system to assist in planning and monitoring.

Conduct research into animal nutrition and breed improvement.

Raise awareness about the importance of the sector in terms of livelihood security, and lobby for adequate funding.

Establishment of new veterinary hospitals and artificial insemination centres.

Setting up of government subsidized live stock markets.

Provision of incentives in the form of easy loans.

Establishment of food processing facilities for canning of meat.

Minerals Sector [23] . FATA has great potential of mineral resources. In order to increase productivity in the mining sector and improve the quality of the product, following strategies will be adopted:-

Legal framework governing mining activities to encompass leasing, dispute resolution mechanisms and regulation.

Increase the productivity of mines by adopting modern methods to boost quality and reduce wastage.

Introduce new technologies through joint ventures on the basis of public-private partnerships.

Maintain a healthy workforce by improving safety; develop emergency evacuation procedures.

Improve the quality of human resources through intensive training.

Following needs to be done to improve the situation in this sector:-

(a) To encourage tribesmen either in joint ventures or lease agreements with public and private sectors.

(b) The whole of FATA needs to be brought under geological survey mapping.

i. Industrial Sector [24] . However, there is a great potential available for development of certain industries in the area which should be exploited by public and private sector. These include following:-

Construction material including cement.

Decorative material including wood and marble products.

Defence related industries including manufacture of small arms and ammunition.

Public and private sectors should be encouraged to set up small scale industries.

The option of establishing clusters or pockets in industrial parks will be explored.

To set up training centres within functioning industrial units, for marble processing, mining, light engineering or footwear manufacture.

Organise local craftsmen into trade guilds for promoting best practice, standardisation and quality control.

Set up a regulatory authority for formulating investment-friendly policies through dialogue with stakeholders.

Strengthen infrastructure in the region, including roads, electricity and water supply.

Hold a regular dialogue with local tribes to promote investment.

Short-term mining courses can be arranged by the mining department at the Peshawar University of Engineering and Technology.

j. Tourism Sector [25] . Recommendations in this regard are as follows:

Develop tourist facilities and services at selected locations.

Facilitate private-sector involvement in the sector.

Promote areas that already witness some degree of tourist activity.

Encourage and facilitate inter-agency exchange visits and tours.

Carry out research on the cultural and natural heritage of the area, and make this information widely available.

k. Infrastructure Development. Following measures are recommended in this regard:-

Rehabilitate roads for better connectivity to strategic locations.

Construct new roads in remote or underdeveloped areas to generate economic opportunities and improve security.

Build new bridges and rehabilitate damaged bridges.

l. Good Governance. Good governance is a key prerequisite for achieving the goals set out in the economic development of FATA. Governance system is participatory, supported by a robust legal framework with active public consultations.

m. Law and Order. Another basic requirement for socio-economic development is human security. This is of course a critical issue for the people but security is equally important to service providers and government officials who travel to and work in the area. In this regard following is recommended [26] :

Reinforcement of the Frontier Corps with more manpower, modern equipment, mobility, intelligence, higher salaries and training in counterinsurgency.

Properly trained, better equipped and reformed FATA police and Khasadar Force.

Fencing of Pak-Afghan border with monitoring sensors Afghanistan and selected crossing places.

Phase wise handing over of areas to FC and local Law Enforcement Agencies.

n. Conflict Resolution. The people of FATA have long been accustomed to use of violent means for settling of conflict between the members of different tribes and clans. Although an indigenous mechanism for conflict resolution already exists in the form of the jirga, there is perhaps a need to find ways to prevent conflict from occurring in the first place. In this connection, it is worth exploring the possibility of a set of rules and regulations, arrived at by mutual consensus, to serve as a basic charter or code of conduct for peaceful coexistence.

o. Private Sector Participation. The private sector has to play a crucial role in achieving the targets of economic development in FATA. The government must improve the framework conditions for the development of the private sector, and encourage public-private partnerships.

Budgetary Allocation

14. Each year, the federal government sets aside a block allocation, known as the Annual Development Programme (ADP), intended exclusively for development expenditure. This allocation, disbursed according to province, region, sector or project, is part of the federally funded Pubic Sector Development Programme (PSDP).FATA receives an annual share of ADP funding. In addition to the ADP, the PSDP provides separate funds for programmes and projects in various agencies and FRs, and contributes to donor-assisted initiatives

15. Sector-specific allocations from the ADP are made at the Civil Secretariat FATA, based on priorities and needs. Although the development budget is not intended to finance salaries or recurrent liabilities, in practice this is often the case. Insufficient allocations for repairs and maintenance, meanwhile, mean that some of these costs are also met through the development budget [27] .

Sector Wise and Consolidated Budgetary Allocation.

16. Details are attached as Annexure A.

ECONOMIC DEVELOPMENT MODELS FOR FATA

17. ROZ (Reconstruction Opportunity Zones) Model [28] . ROZs would be a specific type of export processing zone, and thus part of a world-wide network of free trade zones. Free trade zones are typically fenced-in industrial parks. As such they are self-contained islands of infrastructure necessary to support manufacturing, often located in relatively undeveloped geographic locations. They support economic development by facilitating cooperative production among workers in more than one country. That is, they are physically located inside the boundaries of a country but are treated as if they were located outside the country for customs purposes. Thus, for components or materials which are imported into ROZs, processed into finished goods, and later exported from the country, no tariffs would be payable and customs procedures would be streamlined. Both Pakistan and Afghanistan are currently exporting certain goods to the United States duty free under the Generalized System of Preferences (GSP).The ROZ program would offer additional tariff benefits to Afghanistan and Pakistan. In turn, it would place additional requirements on both countries.

a. Implications. [29]

ROZs do not actually make people resilient to radicalization, and in fact further provides economic base for the militancy. The stated goal of ROZs is to provide gainful employment means that can provide alternatives to militancy.

ROZs will transfer wealth to rich industrialists, and have only marginal impact on welfare of the tribal areas laborers.

ROZs are unlikely to receive enough financial capital to overcome the hurdle to achieve sustainability from American and Pakistani investment unless other international friends of Pakistan and their respective self-interests and potential markets are taken into account

ROZs are located in remote location and fail; they will not only waste private investment, but also scarce public investment.

ROZs specific reporting requirements and constant action required form Government of Pakistan are likely to distract from fundamental structural reforms that are needed to improve business efficiency, intellectual property laws, reduce subsidies to private entities, and fight corruption in tax and customs departments.

Business partners will not invest in local human capital in sites deemed to fail; instead the entrepreneurs will act in their economic interest by extracting subsidies from the local government to participate in high risk ROZs

Remotely located ROZs are, the harder it will be to attract the highly skilled talent to train, manage and operate them.

Some observers warned against creating a situation similar to the Gadoon Industrial Estate in NWFP, established in the 1980s with U.S. support to help eradicate poppy cultivation and support local industry. The project extended special tax status to factories in Gadoon for a limited period. When the tax breaks ended, the factories shut down, leaving an “industrial graveyard”. If it still intends to establish ROZs, the U.S. government must avoid these pitfalls.

The ROZs could indeed stimulate FATA’s economy if high value commodities such as leather goods, wool products, carpets and furniture are included in a future ROZ proposal. Their production could and should include female workers, as well as strong preferences for hiring FATA workers in companies participating in the program.

A longer-term approach should focus on establishing specialised economic zones that tap FATA’s indigenous resources, where the incentive for exploiting untapped resources is as compelling as the tax breaks. With strong agricultural and horticultural potential, and rich natural resources including marble and other semi-precious stones, minerals, coal, and sand containing an abundance of particles that favours glass production – FATA has opportunities for real economic growth.

18. FATA Sustainable Development Program [30] . The Civil Secretariat FATA in partnership with the World Conservation Union (IUCN) Pakistan has formulated the FATA SDP or Sustainable Development Programme. The plan formulation process was also supported by USAID, DFID, IMC and SMEDA.

36. The SDP provides the strategic framework for social, economic and ecological development in many sectors in the FATA region. It aims to narrow down the existing gap between development planning, strategic investments and people’s needs by practically addressing the existing social and economic disparities of the area in a specified time frame.

19. The core components of the plan are structured around specific sectors like education, health, water supply & sanitation, agriculture, livestock, forestry, fisheries, irrigation, water management and power, roads and bridges, industry, mines and mineral, trade and commerce, tourism and skill development. The issues that will be tackled range from broad structural concerns such as governance and institutional capacity to the more normative considerations of social cohesion and cultural identity. The plan outlines measures to improve services, upgrade infrastructure, promote the sustainable use of natural resources, and bolster activity in the trade, commerce and industrial sectors. It explores options to improve institutional and financial capacities, and to expand and diversify available economic opportunities. The plan is flexible and adaptable, allowing for a two-phased implementation schedule. Priority interventions are identified for the first phase, spanning a period of five years, followed by a second, four-year consolidation period. Monitoring and evaluation mechanisms outlined in the SDP are designed not only to gauge progress towards specified targets but also to provide the flexibility to address emerging needs. It has been decided to initiate the formulation of detail sector plans for a 5 year time span.

a. Aims and Objectives [31]

The aim of the detail level sector plans is to develop sector level projects/ programme and prioritize sectors.

To operationally the sector specific strategic framework, as identified in the FATA SDP.

To carryout need assessment of the stakeholders pertaining to respective sectors at the secretariat, line directorates, field offices and community level.

To translate the sector specific strategic and priority interventions into implement able projects/schemes

To work out the tentative cost estimates for each scheme/project in light of the 5 year budget line of each sector

To prepare brief concept papers for individual projects.

To assist the departments in preparation of PC-Is for projects to be implemented in year 1.

To look at the environmental protection aspect issues of the various projects from the perspective of potential donors.

To prioritize the projects’ portfolio for incremental implementation under each sector.

Within the strategic framework of SDP detail sector plans will be prepared taking into account input from all relevant stakeholders. The selected sectors for detail plans are:

Education

Health

Water Supply and Sanitation & Rural Development

Agriculture and Livestock

Forest and Fisheries

Irrigation, Water Management and Power

Roads and Bridges

Institutional Strengthening

20. GCC-EU FATA Friendship Fund (FFF) [32]

In cooperation with the GCC states, the EU has set up a GCC-EU FATA Friendship Fund, and has sponsored it with â‚¬100m p.a. for five years to fund the development in the tribal areas for homeland security, containment of Taliban versus Afghanistan, stabilization of the democratic government in Islamabad and burden-sharing in the Alliance with the U.S.

The purpose is that Pakistan should get more attention in EU foreign policy, and the focus of all development programs in Pakistan should shift to the Afghan border region FATA as well as the North-West Frontier Province (NWFP) and Balochistan.

The Gulf Cooperation Council (GCC) has also taken a lead in stabilizing the situation in Pakistan and Afghanistan in the interest of homeland security and stabilization of the important security partner in Islamabad.

This involves several thousand workers with special skills from the FATA to be employed in the Gulf to earn money for FATA families.GCC-EU FATA Friendship Plan aims to develop the FATA and separate the majority of peaceful people from the few radicals.

Rapid infrastructure to train this core group with master teachers, local infrastructure agreed with tribal elders and payment of USD 40/month for each student may be essential for success. Best to absorb e.g. 50,000 as paid students, thus giving their families income, as well (cost: USD 2m/month). Currently, the Taliban and drug dealers give them work and some income

Annexure A

SECTOR WISE AND CONSOLIDATED BUDGETARY ALLOCATION

1. Agriculture

Activity

Budget (million rupees)

Major expenditure

Years 1-5 Years 6-9

Total

Development of ‘pocket areas’

700.00

300.00

1,000.00

Identification of potential pocket areas and products, facilitation of relevant industry. Facilities and infrastructure. Farmer mobilization. Marketing facilities

On-farm water management

500.00

200.00

700.00

Demonstrating new technologies in water management

Land reclamation

3,160.00

2,940.00

6,100.00

Agricultural machinery, operation and maintenance costs. Technical know-how. Purchase of high-yield seeds. Establishment of nurseries for high-yield seeds

Agricultural extension and institutional support

600.00

300.00

900.00

Integrated pest management. Farm service centers. Micro credit schemes. Salaries, buildings, maintenance, transport

Women’s extension services

250.00

150.00

400.00

Recruitment, pre-service training, transport, conducive living environment

Agricultural research

600.00

400.00

1,000.00

Strengthening agriculture research. Knowledge-based linkages with national and international research institutes

Database, management information system

5.00

10.00

15.00

Development and management. Consultant fees, dissemination of information, new projects

Total

5,815.00

4,300.00

10,115.00

2. Live Stock and Poultry

Activity

Budget (million rupees)

Major expenditure

Years 1-5 Years 6-9

Total

Extension support services

300.00

200.00

500.00

Inputs for model farms, livestock emergency relief cell, breed improvement. Training of farmers, community livestock extension workers. Transport.

Feed and fodder development

225.00

175.00

400.00

Purchase of inputs for new varieties of fodder and fodder trees. Demonstration plots (land, equipment, staff)

Marketing and industry development

250.00

150.00

400.00

Information support, marketing facilities. Access to credit, technical support. Livestock and poultry feed mills. Establishment of liquefied nitrogen plant, community dairy units. Enterprise development

Database, management information system

20.00

5.00

25.00

Data collection and processing. Survey, resource mapping. Management information system development

Research

100.00

60.00

160.00

Contracts (research institutions)

Capacity building and institutional strengthening

300.00

200.00

500.00

Staff recruitment, training, advanced education. Infrastructure development and strengthening (veterinary institutions, semen production unit). Salaries. Exerts and specialists

Total

1,195.00

790.00

1,985.00

3. Forestry

Activity

Budget (million rupees)

Major expenditure

Years 1-5 Years 6-9

Total

Forest and pasture management

1,550.00

2,150.00

3,700.00

Cost of consultancies and initiatives

Forestation, soil erosion prevention, watershed management

1,350.00

500.00

1,850.00

Plant production, plantation management. Check dams, terracing, land leveling, river bank treatment

Non-timber forest products

300.00

250.00

550.00

Sericulture and horticulture promotion. Salaries

Wildlife and biodiversity management

350.00

200.00

550.00

Consultant, demonstration site, restocking

Alternate energy

300.00

150.00

450.00

Consultant, training, demonstration

Extra-fiscal mechanism

150.00

0.00

150.00

Consultant, pool fund

Documentation, knowledge management

30.00

20.00

50.00

Field surveys. Documentation of ownership rights. Research. Extension and awareness-raising material

Capacity building

200.00

50.00

250.00

Training, equipment

Total

4,230.00

3,320.00

7,550.00

4. Fisheries

Activity

Budget (million rupees)

Major expenditure

Years 1-5 Years 6-9

Total

Fish seed production and rearing

200.00

100.00

300.00

Construction, salaries, machinery, equipment, gear, transport, fish feed. Maintenance cost of infrastructure, operational cost of hatchery. Fish seed facilitation centers

Extension support

100.00

50.00

150.00

Survey and feasibility, transport, extension material, training. Establishment of integrated fish farms. Fish disease diagnostic laboratory

Dam and basin fisheries

30.00

20.00

50.00

Equipment and gear, seed transportation, fish harvesting

Conservation and management of aquatic biodiversity

20.00

15.00

35.00

Watch and ward. Conservation and management plans. Transportation, fish stocks, fish seed. Sport fishing

Fish-based industry and marketing development

25.00

15.00

40.00

Information support. Marketing facilities. Access to credit, technical support.

5. Irrigation, Water and Power Development

Activity

Budget (million rupees)

Major expenditure

Years 1-5 Years 6-9

Total

Rehabilitation of surface irrigation schemes

700.00

100.00

800.00

Design fee, construction cost of structures

River training, flood protection

800.00

250.00

1,050.00

Design fee, construction cost of structures

Water management, high-efficiency irrigation

800.00

550.00

1,350.00

Design fee, construction cost of structures

Feasibility studies, construction of 20 small dams

2,160.00

2,165.00

4,325.00

Consultancy and design fee, construction cost of structures

Construction of 450 hydel power generation units

700.00

418.00

1,118.00

Design fee, construction cost of structures

Rehabilitation of tube wells, installation of new tube wells

40.00

30.00

70.00

Consultancy and design fee, machinery, construction works

Institutional strengthening and capacity building

250.00

100.00

350.00

Salary of additional staff, transport, office operational expenses

Total

5,450.00

3,613.00

9,063.00

6. Road Infrastructure

Activity

Budget (million rupees)

Major expenditure

Years 1-5 Years 6-9

Total

Rehabilitation of existing roads

4,000.00

1,000.00

5,000.00

Materials, salaries. Consultancy and design fee. Repair works, maintenance. Management costs

Improvement of roads

5,500.00

1,375.00

6,875.00

Materials, salaries. Consultancy and design fee. Repair works, maintenance. Management costs

New roads

14,000.00

3,500.00

17,500.00

Materials, salaries. Consultancy and design fee. Management costs

Bridges

3,700.00

925.00

4,625.00

Materials, salaries. Consultancy and design fee. Repair works. Management costs

Equipment purchase and maintenance

500.00

125.00

625.00

Equipment, vehicles, materials, laboratories

Institutional strengthening

125.00

30.00

155.00

Staff, salaries, offices, computers. Database development. Training

Total

27,825.00

6,955.00

34,780.00

7. Industry

Activity

Budget (million rupees)

Major expenditure

Years 1-5 Years 6-9

Total

Industrial pockets or clusters

150.00

50.00

200.00

Advocacy, field visits

Skills development centers

100.00

50.00

150.00

Support for upgrading existing industries, training, and stipends for students. Hiring of subject experts

Local guilds

50.00

25.00

75.00

Database. Training, workshops, meetings. Experts to assist in developing standards

FATA industrial/engineering research unit/chair

200.00

150.00

350.00

Staff, research, dissemination of findings. Coordination, consultations

Two ‘reconstruction opportunity zones’ in FATA

1,300.00

1,000.00

2,300.00

Land and infrastructure development

8. Mining

Activity

Budget (million rupees)

Major expenditure

Years 1-5 Years 6-9

Total

Evaluation, exploration and development of coal

400.00

200.00

600.00

Geological exploration, exploratory drilling. Estimation and development of reserves

Mechanized marble quarrying, model quarries

180.00

120.00

300.00

Land, development. Buildings, machinery and equipment

Evaluation, exploration and development of copper

500.00

300.00

800.00

Regional, geochemical, geological and geophysical surveys. Exploratory drilling

Establishment of ‘mini-marble city’

150.00

100.00

250.00

Cost of land, infrastructure development

Development and exploration of other mineral resources

500.00

300.00

800.00

Geological and geographic surveys, exploratory drilling. Development of resources

Infrastructure facilities in mining areas

900.00

600.00

1,500.00

Cost of small access roads and other infrastructure facilities

Capacity building (mine owners, workers)

500.00

300.00

800.00

Training, training materials. Stipends for workers. Short courses for trainers.

Institutional strengthening

180.00

120.00

300.00

Recruitment of experts, logistical support. Short courses, training visits. Support for dispute resolution

Total

3,310.00

2,040.00

5,350.00

9. Trade and Commerce

Activity

Budget (million rupees)

Major expenditure

Years 1-5 Years 6-9

Total

Development of legal framework

5.00

3.00

8.00

Legal advisor fees, consultations, implementation

Construction of warehouse facilities at three locations

25.00

5.00

30.00

Consultancy and design fee, land cost, construction, salaries of basic staff

Skills development

6.00

2.00

8.00

Course fee, transportation, boarding and lodging for participants

Total

36.00

10.00

46.0

10. Skill Development

Activity

Budget (million rupees)

Major Expenditure

Years 1-5 Years 6-9

Total

Upgrading and improving institutes and centers

29.00

10.00

39.00

Review of courses, introduction of new courses. Equipment for laboratories. Workshops, skills development centers, new courses

Student incentives

140.00

112.00

252.00

Scholarships, apprentice stipends

Female technical and management institutes (Kurram)

100.00

20.00

120.00

Buildings, staff at head office and field cells

Integrating vocational training with secondary education

40.00

10.00

50.00

Vocational and technical units at nine boys’ and three girls’ secondary schools

Skills development management information system

30.00

13.00

43.00

Database. Office and field staff. Training and set-up. Equipment

Faculty training

15.00

10.00

25.00

Technical, communications and management courses. Subject experts. Mobile teams for WSDC staff

Institutional strengthening

65.00

35.00

100.00

Deputy directors (head office). Coordinators in five agencies. Staff training. Consultants

Total

419.00

210.00

629.00

11. Tourism

Activity

Budget (million rupees)

Major expenditure

Years 1-5 Years 6-9

Total

Publicity for heritage and tourist sites

10.00

5.00

15.00

Material design, resource persons

Inter-agency exchange visits, study and sports tours, festivals

70.00

30.00

100.00

Boarding, lodging and transportation of participants. Event organization

Residential facilities and services for tourists (selected locations)

200.00

100.00

300.00

Improvement of existing facilities, construction of new facilities

Inventory of heritage sites, publication

5.00

10.00

Cost of research and publishing material

Total

285.00

140.00

425.00

12. Consolidated Budget

Sector

Budget (million rupees)

Years 1-5

Years 6-9

Total

Education

15,604.00

12,041.00

27,645.00

Health

8,300.00

5,400.00

13,700.00

Water supply and sanitation

2,385.000

1,655.000

4,040.000

Rural development

1,335.000

515.000

1,850.000

Agriculture

5,815.000

4,300.000

10,115.000

Livestock and poultry

1,195.000

790.000

1,985.000

Forestry

4,230.000

3,320.000

7,550.000

Fisheries

435.000

250.000

685.000

Irrigation, water management and power

5,450.000

3,613.000

9,063.000

Roads and bridges

27,825.000

6,955.000

34,780.000

Physical planning and housing

1,000.000

405.000

1,405.000

Industry

2,025.000

1,395.000

3,420.000

Mining

3,310.00

2,040.00

5,350.00

Commerce and trade

36.000

10.000

46.000

Skills development

419.000

210.000

629.000

Tourism

285.000

140.000

425.000

Cross-cutting initiatives

960.000

460.000

1,420.000

Total

80,609.000

43,499.000

124,108.000

13. Budget Summary

Item

Amount

(billion rupees)

Total financial requirement

124.108

Total committed finances

63.600

Government of Pakistan

60.000

Foreign-aided projects

3.600

Unfunded financial portfolio

60.508

BIBLIORAPHY

1. Third Quarterly Report for FY 2009, Overview Of The Economy

2. Dr.Ishrat Hussain address at Command and Staff College, Quetta 2009

3. FATA Sustainable Development Programe.2007-2015

4. US Congress Report on ROZs, 2009

5. www.democracydevelopment.com

6. www.usaid.com/competitive/support/fund

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