The bank’s executive board is likely to take up the economic revitalisation of Khyber-Pakhtunkhwa and Fata project in mid-January. The project is designed to create employment opportunities through rehabilitation of small- and medium-scale enterprises (SMEs), according to a WB report.
The $20 million project will be launched in the Malakand division where the military operation caused over $1 billion in losses and reportedly rendered 2.7 million people homeless, in what comprised the largest internal displacement in recent history. According to the report, the Malakand operation caused industrial growth to stagnate, “in addition to loss of jobs and other legitimate earning opportunities”.
The tourism sector and ancillary economic activities in Swat have ceased almost entirely, the report says, adding that the mining sector has also taken a serious hit, operating at less than 10 per cent of previous output levels. “Out of 270 mines, only 25 are currently operational in Khyber-Pakhtunkhwa,” says the report.
Under the economic revitalisation project for rehabilitation of SMEs, the government will provide matching grants for reconstruction of buildings and replacement of machinery and equipment. The project also envisages matching grants for up-gradation of SMEs, aimed at enhancing productivity.
The plan also includes spending $4 million towards capacity building of both Khyber-Pakhtunkhwa and Fata governments. Usually, capacity building involves appointment of consultants on hefty packages by the World Bank. Meanwhile, the international response to the post-operation rehabilitation remains lukewarm. Ten donors have so far pledged only $130 million in the WB-administrated multi-donor trust fund (MDTF), established in late 2009 to compensate for losses in the Malakand operation and address the root causes of terrorism. The economic revitalisation project will be the first scheme financed out of the MDTF and the first project to be implemented in the quarter as the WB pressurises Pakistan to reform key sectors.
Owing to the inability to carry forward tax and power sector reforms, the Washington-based donor agency has virtually blocked Pakistan’s credit line. In 2010, the WB approved only two projects of less than $300 million value.
Published in The Express Tribune, January 4th, 2011.
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