Type of Review: Annual Review - 2012
Project Title: KP/ FATA/ Balochistan Multi-Donor Trust Fund
Date started: March 2010 (agreement by SofS) Date review undertaken: February 2012
Introduction and Context
What support did the UK provide?
In 2010, the UK pledged to give £30 million (US$ 48.5 million) to the MDTF. To date the UK has disbursed £20 million (US$ 30.7 million). In 2010 the UK gave £10 million and in 2011 the UK gave an additional £10 million). An additional £10 m is pledged, to be disbursed. The date for this disbursement is not yet agreed.
Overall Pledges for the MDTF
Pledged
Donor
Australia
Denmark
Amount
(m) Currency USD Signed Paid in Remaining to contribute
10
40
AUD
DKK
8.9
7.1
8.9
7.1
8.9
7.1
0
0
European Union
Finland
Germany
Italy
Sweden
Turkey
15
5.6
8
4
5
5
EUR 19.2
19.2
EUR 7.6
7.6
7
7.6
EUR 11.2
11.2
11.2
EUR 5.4
5.4
5.4
USD
USD
5
5
5
5
5
5
12.2
0
0
0
0
0
UK
USA
30
25
GBP 45.8
45.8
30.7
USD 25 25 25
15.1
0
0
Total 140.2
140.2
113 27.2
What were the expected results?
There are 2 levels of results reflected in results frameworks (RF) at two levels:
(1) Project level results – these have been defined in an RF for each of the 10 projects including baselines and targets.
(2) An overarching MDTF results framework - this is more problematic and remains incomplete despite a significant amount of work since last annual review.
Progress on the MDTF RF and rationale for measuring results against the 3 streams of activity of the
OPCNA:

An indicative RF was produced in July 2010 and a draft DFID LogFrame was put together from that. The first tranche of DFID funds (£10m) was released in the knowledge that the LogFrame had not been fully completed, and that this work needed to be done;

The 2011 Annual Review was conducted shortly after the MDTF became fully operational. It correctly identified the fact that the RF lacked detail, baselines, and targets. And that the indicative DFID LogFrame needed to be updated;
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
The Review further suggested that an updated LogFrame be produced once the new RF was done;

The MDTF Technical Secretariat (TS) began work on an outcome based RF over the summer, as part of the OPCNA process. In this process the RF was aligned to PCNA objectives (the overarching guiding strategy for the MDTF) and to focus on the three priority areas (called streams). The OPCNA and new RF outline was approved by the SC at the end of 2011;

Work continues on the indicators underpinning this RF (see annex II);

Given the weakness of the original LogFrame and RF (essentially impossible to report against) it was agreed with the Review Team that it would be more meaningful for the AR to measure progress against the new RF;

However, as this too lacks targets and baselines, it was recommended by the DFID office that the review report against the 3 activity streams of the OPCNA. These replace the original 5 pillars of the MDTF, and likewise have neither baselines nor targets – they are just focal areas of activity and are of little help in measuring success. For the purpose of this review, projects have been organised into the 3 OPCNA streams;

Without any baselines or targets in the MDTF RF, projects could only be assessed against their own project targets. The 2012 Annual Review recognizes that the projects selected since the
MDTF was established were authorised to get the Fund moving – donors are fully cognisant that they are not strategic and the approach as a result has been forward leaning in the knowledge that the next round of projects will be selected and developed differently.
At this stage therefore it is possible to lay out the areas for results expected, but not yet define the scale.
The 3 MDTF streams:
(1) Growth and job creation
(2) Improving local services and community support
(3) Policy reforms and governance support.
The completion of the MDTF RF (inclusion of measurable targets against baselines) is currently impeded by the design of the MDTF: the MDTF’s Technical Secretariat (TS) cannot determine expected results because it does not know the nature of projects that will be proposed by Government, and it cannot assist Government in preparing these as it does not know the value of contributions. The review has described this as a ‘chicken and egg’ situation that is discussed below in more detail. Recommendations are given in this review on how to address this structural impediment and develop the results framework
(see narrative report and recommendations).
In addition, the review has recommended that wider results of the MDTF process be included in the RF.
Indeed, all donors report that the MDTF has an effect, and results, beyond those delivered by individual projects. In the World Bank’s memorandum to its Board in January 2010 1 , the Bank outlines these as:

Alignment with Government priorities

Aid effectiveness: harmonization & coordination

Economies of scale

Reduced transaction costs for Government and donors

Inherent controls

Flexibility: Facilitates financing of investment in institutions, and TA for service delivery, capacity building and Governance activities through Provinces’ Line Departments and local governments

Leverages potential downstream funding
The review recommends that some wider results are included in the results framework, with baselines and targets. These include:

Donor harmonisation and alignment

Keeping peace building and the PCNA on the agenda
1 ESTABLISHMENT OF A PROGRAMMATIC MULTI-DONOR TRUST FUND THE NORTHWEST FRONTIER REGION OF
PAKISTAN, World Bank, January 5 2010, p.3
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
State building
Weighting: the impact of the MDTF has been split: 75% for combined impact of project output weightings in the three focus areas, and 25% for the wider results.
Rationale:

With a multilateral mechanism such as this, and in a country as complex as Pakistan, it might be reasonable to set a sliding scale for weighting, reflecting how in year 1 for example, some wider results, such as donor harmonization and keeping the PCNA on the agenda, will have a large share of overall results. As impact from projects picks up in time, this 25% might be expected to reduce.

The OPCNA does not prioritise between its three focus areas, and so weightings of 25% each have been applied. This should be reconsidered as the RF is completed.
What was the context in which UK support was provided?
After intense conflict in parts of the western border areas of Pakistan in 2009, the Government of
Pakistan (GoP) asked the World Bank to establish a MDTF to support reconstruction and development in border areas. In parallel it asked for international help in conducting a Post Crisis Needs Assessment
(PCNA). World Bank Executive Directors agreed a memorandum for the MDTF in January 2010 (see footnote 1) . It refers to the MDTF as for “the Northwest Frontier Region of Pakistan”, defined as NWFP,
FATA and parts of Balochistan. This equates to DFID’s ‘border areas’ terminology. The PCNA was completed and signed off by GoP in 2010. A further document ‘Operationalising the PCNA’ (OPCNA) connecting the PCNA to the MDTF was signed off in 2011.
The overall objective of the MDTF as stated in the Memorandum is “to support implementation of a programme of reconstruction and development aimed at recovering from the impact of the crisis and reducing the potential for further conflict”. The MDTF aligns donors behind GoP national and provincial strategies. All interventions under the programme (and parallel IFI investments) were to be aligned with government development plans and priorities identified from the PCNA.
Since the memorandum was agreed the 18th amendment to the Pakistan constitution and subsequent budgets have given greater powers and resources to the provinces. This has significantly changed the relative positions of the federal and provincial governments as MDTF stakeholders.
Section A: Detailed Output Scoring
Output 1: Growth and Job Creation
Output 1 Score: B - Outcome moderately did not meet expectation
Progress against expected results: At US$ 81 million the projected spend represents 62% of the allocated funds. There are six projects in this area. One is in the implementation phase and initial results are being delivered, one is PC-1 approved (Government approval process) and has begun early implementation, two are awaiting PC-1 approval and two are in design phase. All are due to begin implementation this year.
Across all streams project progress is slow. This is discussed in greater depth in the overall results analysis.
Below are the expected results from each project in this stream: i. KP Emergency Road Project
(US$ 8 m, Implementation begun)
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Expected results:

10.5 km of the provincial highway S-3B from Sharif Abad (Km 30+424) to Kanju (Km 40+924) constructed and operational
Leading to expected outcomes of:

34%, 26% and 5% decrease in vehicle operating costs of 2-axle truck, 3-axle truck and passenger buses

50% increase in operating speeds of commercial traffic

Level of customer satisfaction to a 3 (High = 4.0, Low = 1.0: Baseline not yet known)
Result to date: 2.5 km of road has been delivered. Planned completion by December 2012.
Risks: medium risk project for which an Operational Risk Assessment Framework (ORAF) has been developed. Mitigation measures have been included in design.
ii. Economic Revitalisation of KP and FATA
(US$ 20 m, PC-1 approved)
Expected results:

Business rehabilitation: 850 SMEs use matching grants for rehabilitation and up-gradation

Jobs: 8,000 jobs restored/created

Sustainability: 60% of all assisted SMEs operational and productive at the completion of the project

Investments: US$10m attracted from Diaspora and migrant workers from KP and FATA

Investment Facilitation Authority (IFA), FATA and Investment Facilitation Center (IFC), KP established and operationalized
Result to date: none, Very early implementation begun only. The outreach activities are taking place advising the public about the project and the terms to apply, separate sessions have been delivered to women (3% of beneficiaries need to be women), the applications have been designed, printed and distributed. To date about 100 applications have been received by the SMEDA (implementing entity) out of which 10 have been found to be eligible for financing. Also on the project management front, the project management units are in place and operational.
Risks: high risk project for which an ORAF has been developed. Mitigation measures have been included in design.
iii. FATA Rural Livelihood and Community Infrastructure Project
(US$12 m, waiting PC1 approval)
Expected results:
Project will support the establishment of a department and build its capacity to manage and implement demand-driven community-based activities.
Result to date: none, estimated start date is February 2012. Progress to date: Project has been appraised, negotiated and approved by the ministry of law and awaiting PC1. With the February 16,
2012 authorization to transfer the approval powers to the provinces and FATA, the FATA DWP will be meeting on the 15th of March to approve the project and thereafter they can be signed and implemented. This has resulted in one-month delay from the target date of February: implementation will now start in second half of March.
Risks: high risk project for which an ORAF has been developed. Mitigation measures have been included in design.
iv. FATA Rural Roads
(US$ 16 m, Design Phase)
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Expected results:
Rural roads to be constructed under the project are estimated at 80 km.
Result to date: none, estimated start date: May 2012
Risks : no EPP is available so risks are unknown. But this project’s start already held up by poor security v. FATA Urban Centres Project
(US$7 m, waiting PC1 approval)
Expected results:
Project will fund technical assistance to develop a conceptual framework for FATA Urban Centres and will provide needed infrastructure and equipments to improve service delivery
Result to date: none as anticipated start date: February 2012 delayed one month for same reason as project III above.
Risks: overall risks are assessed as medium with potentially high impact. They include stakeholder, fiduciary and breadth and spread of project risks.
vi. KP southern area development project
(US$18 m, Design phase)
No results or risks assessed yet.
Impact Weighting: 25%
Revised since last Annual Review? Yes - see text on weightings above
Risk: assessed medium to high; developed projects have a mitigation strategy. The main risks associated with the Balochistan and FATA projects are the capability of the governments to prepare and implement projects, and security and access. The MDTF Secretariat is working closely with the relevant government to provide the support required. Strong monitoring will be required for all projects.
Revised since last Annual Review? Since programme memorandum, risks have been developed for each project
Output 2: Improving local services and community support
Output 2: B Outcome moderately did not meet expectation
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Progress against expected results: There are two projects to date for this output. One is awaiting
PC-1 approval; the other is in the design phase. Both are due to begin implementation in the next two months. At US$ 35 million the spend represents 27% of the MDTF’s planned expenditure.
The expected results are: i. Revitalising health services in KP
(US$25 m, Awaiting PC1 approval)
Expected results:
Project aims to improve health services in KP through rationalization and introducing the private sector to manage health centres in 7 districts
Results to date: none as e stimated start date: February 2012
Risks: moderate operational and reputational risks and overall medium risk. A n ORAF has been developed. Mitigation measures have been included in design.
ii. Promoting girls education in Balochistan
(US$ 10 m, In design phase)
Expected results:
Support in the education sector to increase attendance of girls at schools in Balochistan
Results to date: none as e stimated start date: April 2012
Risks: No EPP yet available. Task Team Leader sees major risk as the Government’s capability to prepare the project. To mitigate slow timeframes, a deadline has been given to GoB. Additionally, strong monitoring mechanisms are required to ensure appropriate selection of school sites, community mobilisation and minimise fiduciary risk.
Impact Weighting : 25%
Revised since last Annual Review? Yes
Risk: cannot comment on risk of output as a whole (there is no collated measuring per stream), other than that risks are medium for KP health services and will be developed in the project EPP for
Balochistan girls education project. Mitigation measures have been developed for the health project and will be developed for Balochistan girls education.
Revised since last Annual Review? Yes
Output 3: Policy reforms and governance support
Output 3: B Outputs moderately did not meet expectations
There are three projects in this area. Two have started and the other is being negotiated between
Government and WB. At US$ 14.76 million this output represents 11% of the MDTF’s total allocated spend. The greatest progress in this area is in the setting up of the governance support units. These units help ensure that the implementation of the PCNA is firmly housed in the Planning and
Development department; build upon Provincial government ownership of the PCNA and the MDTF; and that peace building is prioritised and in-line with other government financial planning and
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expenditure.
i. Governance support project
(US$ 8 m) a) Capacity Enhancement
KP & FATA are able to manage and coordinate implementation of PCNA short and medium term interventions and design longer-term interventions.
Expected results:

Overall 10 year Governance Program designed

Five Project concept notes developed for interventions

Development Partners Forum established

Systems established to monitor progress of PCNA programme

Five studies completed and disseminated

Ten workshops conducted
Results to date: Started. The support units in KP and FATA have been set up (Balochistan awaits an ongoing needs assessment), coordinators are in place. Nine topic experts being recruited. b) Rapid Response Funding window
Expected results:
Improved quality of services through implementation of urgent reforms

At least 5 Governance interventions funded in a timely manner

At least 2 reform actions implemented
Results to date: unknown. The results above will need to become much more specific
Risks: overall high with potentially high impact. ORAF developed and evidence of risk mitigation measures already in effect (i.e. NOL on selection of candidates for ISU positions) ii. TA support
(US$ 1.76 m, early stages of implementation)
Expected results: unknown
Results to date: unknown
Risks: no EPP available, not known whether a risk analysis has been developed.
iii. Development of Disaster Risk Management and Response Capacity in Balochistan
(US$ 5 m, Negotiation stage between WB and Balochistan Provincial Government)
Expected results:
Build the capacity at the Balochistan PDMA to respond to disasters in a more efficient way.
Results to date: none so far, Estimated start date: March 2012
Risks: project risk is assessed as high, unsurprisingly considering the location and low government capacity. Some mitigation is suggested in the design, such as reducing the scope of aspects of the programme (i.e. identification of the hazard exposure environment will be limited to the provincial capital only) but the key risks around government capacity are not adequately mitigated.
Impact Weighting: 25%
Revised since last Annual Review? Yes
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Risk: cannot comment on risk of output as a whole, other than that risks are high and have a mitigation strategy in place. Same applies as for output 1. Risks for both projects are high for both governance and disaster management projects, and have a mitigation strategy. No EPP available for TA support so risks and any mitigation is unknown at this time.
Revised since last Annual Review?
Yes
Output 4: Wider results: Including donor harmonisation, new funds etc
Though not formally included in the current results framework there is an agreement by all stakeholders that the MDTF achieves results beyond those delivered by the individual projects. The benefits below have been quoted to the review team:
Donor harmonisation
Donors are brought together at the technical level and at the Steering Committee level. This should drive a more cohesive approach. Actual evidence has not been measured, but at this stage all donors share the view that whilst projects are joint and therefore a reflection of a harmonised approach, they do not adequately reflect their ambitions for the Fund and are a ‘make do’ at this stage with a very clear and shared view that a second round of projects must be more strategic. The rift here is not between donors, whose views in their exchanges with the review team were similar; it is between donors and the WB. That rift is at both levels: technical delivery (pace, organisation of the TS for best effect, use of donor time etc) and at the steering committee level (strategic vision for the Fund). Donor harmonisation has not extended however to bilateral programmes managed outside of the TF (more below).
Reducing Government and donor transaction costs
Harmonised and aligned programmes delivered through one partnership rather than many should in theory reduce Government and Donor transaction costs. PG KP and FATA both consider that the potential benefits in this regard are outweighed by the slow disbursement rate of the Fund 2 and both stated preference for ongoing bilateral assistance.
In terms of donors ’ transaction time, as might be expected at the beginning, the Fund has probably cost donors more time than bilateral arrangements requiring less consensus. Donors feel that expected efficiency gains in this regard are overdue and are of the opinion that the Bank should have more dedicated resources to manage the Trust Fund. The review makes a number of recommendations for reorganisation and increased capacity of the Trust Fund.
Results in this regard are disappointing from all sides therefore.
Supporting peace building and state building 3 and keeping the PCNA on the national agenda 4
Peace building: Alignment has not yet progressed as well as it could beyond the confines of MDTF: donors do not necessarily align their bi-lateral spend to areas where they have comparative advantage over the Fund, although there is some gap filling work by some donors. Donors do not often use the
MDTF as a platform to inform each other and the government of their activities beyond the Fund.
Recent effort by all stakeholders to align project planning more closely to PCNA strategy and priorities, combined with some adjustments recommended in organisational set-up of the MDTF, are first steps in redressing this and using the TF as an effective donor harmonisation and alignment platform.
State building: one of the two projects currently being implemented is designed to support core government capability and capacity. In discussions that the review team had with KP P&D department, the Secretary was clear and firm that he has the lead on peacebuilding strategy and project
2 See annex 5
3 See annex 6 of 2012 annual review report
4 See annex 5 of 2012 annual review report
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development, and that the new PCNA unit is an important tool in delivering his peace building priorities.
Faceless, apolitical funding by the Fund – not tied to any one nation state and therefore free of potentially negative associations
Considering the low profile of the Fund as a result of its disbursement record, the perceived benefit of it presenting a potentially more palatable apolitical face is not proven at this stage.
Leveraging new funds and enabling smaller donors to build on economies of scale
The Fund Administrator needs to accelerate efforts to broaden the Fund’s contribution base; very little has been done so far. Targets should be included in the RF to measure performance. The SC should also consider accepting the Bank’s interest in contributing IDA funds to the Trust Fund.
The Fund is particularly important to smaller donors as it enables them to increase their effect considerably. They are however vulnerable and dependent on the continued contributions of the larger donors for the Fund to continue. Encouraging new donors to contribute is particularly important for them.
See recommendations below.
Impact Weighting : 25%
Revised since last Annual Review? Yes
Risks: Wider benefits of the TF have not yet been included in the general results framework of the TF.
It has been recommended that they should be, and once they are, it is also recommended that a risk analysis and mitigation strategy be drawn up for each. At this stage findings from the review suggest including the following aspects:

Donor harmonisation and reducing Government and donor transaction costs: if results do not improve, risk that this benefit is completely lost. Mitigation: increasing capacity of the TS, delivering timely results drawing in new and more funding. Risk also that this does not move beyond a pooled funding mechanism. Actions are required to ensure information is shared and that it is also assists in aligning the other activities of the donors.

Supporting peace building and state building 5 : there is a known risk that state building approaches that legitimise governments who are not seen to be worthy by citizens, negatively impact on peace building, and/or that peace building as a transformative process can undermine the State. This risk might be especially significant in Balochistan. Mitigation of this risk lies in a deep understanding by
Government of its lead role in this process, and of the value of building voice and accountability into every aspect of its work. The PCNA is built on this premise and signed up to by Government.

Leveraging new funds: risks for the TF if the SC and donors bilaterally do not pick this up more energetically. The TF depends currently on a few donors, some of whom appear uninterested in a second round of funding. The TF contribution base is unbalanced and the sustainability of the fund is at risk as a result.
Revised since last Annual Review? Yes
Section B: Results and Value for Money.
5 See annex 6 of 2012 annual review report
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1. Achievement and Results
Overall: B Outputs moderately did not meet expectations
1.1 Has the logframe been changed since the last review? Yes
As previously described the initial logframe did not have targets or baselines against indicators. It needs to be revised in line with the MDTF Results Framework which itself needs to set milestones and targets against the OPCNA focal areas now agreed with the Steering Committee. DFID has invested significant time in supporting this effort, focussing on improving indicators. This is just one aspect of a measurable RF however. Further work of a more strategic nature is required for this for the MDTF to be measurable and accountable. See recommendations on logframe.
1.2 Final Output score and description: B – Project moderately did not meet expectations
1.3 Direct feedback from beneficiaries:
Projects are yet to deliver on the ground and therefore it is too early to talk directly with beneficiaries.
To ensure the intended beneficiaries view is fed into the design of projects this team recommends that in future, the new PCNA ISUs take greater responsibility for this aspect, as befits good state-building practice. This will enhance government visibility as the primary provider for citizens. However in the attempt to deliver this, it is important also to encourage ISUs to include citizens at all stages of project selection, design, planning, implementation and M&E. This makes strategic sense as well, building as it will the social contract between citizens and state, and showing Government openness and accountability. This aspect is poorly understood by Government and the TS, who wish to inform about results after success, rather than involve citizens in defining priorities. An annual civil society conference has also been recommended.
1.4 Summary of overall progress:
Analysis of Results
Management of results - Results frameworks / logframes: The collective impact of individual projects and whether they sum to give outputs and outcomes is the key issue for MDTF portfolio results.
Currently stakeholders have a different understanding of the level of granularity expected of the MDTF
Results Framework (RF) (because of a different understanding of the overall role of the MDTF). This is discussed in the narrative report.
Since the last annual review, as part of the OPCNA process, the RF has been worked upon extensively:

The MDTF RF has been redesigned to align to PCNA Strategic Objectives – this is helpful as its purpose is to be one instrument to deliver the PCNA

New outcomes (different to those in the PCNA) have been developed for each of the 4 PCNA strategic objectives

Indicators have been developed for each outcome

The original 5 MDTF columns have been replaced with the 3 streams. The added value of these 3 streams is unclear: the do reduce the scope of the PCNA (counter-radicalisation is dropped for example) but they remain so broad (most development projects could claim to deliver results against one of the streams) that they provide little guidance on project selection or protection of the peace building nature of the PCNA. The review team does not recommend revisiting the OPCNA strategy however, but proposes instead, in a phased approach (see options section in narrative report) to work with the RF as it stands and focus on making it measurable.
From the perspective of the MDTF team and following approval of recently developed draft indicators, this RF is now complete.
However this does not serve beneficiaries or meet donor or government needs as it will not enable
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them:
- To understand what results they can expect from the MDTF
- To hold the MDTF to account.
There are reasons for this disconnect; the Secretariat states it is not possible to define targets for the overall portfolio as the projects and future donor contributions are unknown. Donors want to know what results could be bought so that they can make decisions on investments. Government meanwhile puts forward projects without knowledge of either MDTF priority results or funds available. See figure below.
The review team, in discussion with some donors, provides an option to address this, described as the
‘top down approach’. This is dealt with in more depth in the narrative report.
Disbursements: Though no targets were set as to when the projects should begin, there is a consistent report from both the Provincial Governments and donors that projects and consequently results are not being delivered quickly enough. Delivery of results is slow: on average projects take 12 - 18 months from the time that the Provincial government suggests a project to it being implemented on the ground.
That said large DFID development programmes can take between 9 months to two years from idea to start-up depending on complexity. German bilateral projects take on average 12 – 18 months.
Therefore the MDTF operates within similar timeframes as bilateral spend.
Trust Fund disbursement is never quick; there are number of steps between project design and implementation 6 that guarantee good project spend and that collectively take time. Challenges within the WB system such as TTL workload and flexibility 7 have compounded slow start-up; recommendations are made to address these.
That said, there has been progress on reducing disbursement time in two areas:
1. Application of WB Emergency Procedures. This leave some things out of the usual design process in order to speed up disbursements.
2. A PC-1 waiver has been granted for MDTF projects that simplifies and shortens the approval process 8 .
However MDTF needs to get faster to deliver VFM. It is recommended that the TS agree with the SC a minimum and maximum number and length of stages needed to achieve both due diligence and VFM and report on performance against these for each project 9 .
6 See annex 8
7 See section V of this report
8 See annex 5
9 See recommendation 5 in Section V
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1.5 Impact and Sustainability
All MDTF delivered projects are requested by the Government and implemented through government frameworks. Their sustainability will require that GoP is able to take over recurrent financing of Trust
Fund investments. The scale and importance of this will depend on the nature of each project, but all projects will require some level of Government commitment to ongoing effect at project end. The
Emergency Project Paper (EPP) does not require that this aspect be considered in the project design.
Considering the very short timeframe of the MDTF (expired in 2015) it is imperative that new projects do consider this aspect.
Recommendations:
Below are the review’s recommendations. The narrative report (which should be read in conjunction with this report) outlines more details / analysis behind the recommendations.
I. Key recommendations in main body of report
Recommendation 1 : The SC to articulate and agree strategic expectations of the Fund.
Recommendation 2: MDTF TS to develop a measurable RF listing expected results. This will require early conditional pledging by donors, and a thorough results development process (and associated TA) between the Government and the TS.
Recommendation 3 : Establish a dedicated operational / management level distinct from the project development and delivery work of the TS.
This would be needed to support most of the other recommendations.
Recommendation 4 : Establish a formal forum at project level between all stakeholders to discuss project selection and design and improve alignment.
Recommendation 5: Increase the capacity and elasticity of the TS.

Protect tactical project design & delivery from management, policy and planning considerations and exclusively focus on developing and managing projects.

Increase capacity, flexibility and manageability of the MDTF project team by hiring dedicated consultant advisers (as is the case for the ISU project) accountable to the MDTF Coordinator first, and to TTLs for the substantive development of projects. TTLs retain budget control but are freed of
MDTF workload enabling the organisation to surge more quickly.

TS to set timeline benchmarks to the project preparation phases outlined in the OPCNA, to which the TS will be held to account. This should be done taking into account anticipated increased project flow rate provided by the additional capacity in the TS.
Recommendation 6 : Recruit a dedicated peace building expert (possibly from the Bank’s fragile states unit), and a dedicated strategic communications expert to step change the peace building potential of the MDTF in line with the 2011 WDR.
Recommendation 7 : Donors, Government and Trust Fund Administrator agree to a phased approach to transition the MDTF into a more strategic tool, (contingent on recommendation 2).
Recommendation 8: To fulfil the Fund’s strategic potential, parameters should be set around:

Weighting of spend across the three streams

Weighting of spend across Provinces (already set and under review)

Clear baselines, milestones and benchmarks
Recommendation 9 : All expected results should be articulated in the MDTF results framework. This should include a measurement of the value of the wider benefits listed above .
Recommendation 10 : Develop a financing strategy to broaden the contribution base of the Fund. This might include considering IDA funds.
Recommendation 11: All projects should have a VFM assessment before they are approved.
Thoughts should be given as to how this can be done without slowing disbursement.
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Recommendation 12: SC to review the 7% admin fee, clarifying its expectations regarding a dedicated capability and taking into account recommendations for greater capacity in the TS, before a second wave of financing.
II. Other recommendations in the annexes
Annex 4: Harmonisation and Alignment:
Recommendation 13: TS proceeds with the intention to remove prot ection of each province’s budget in a limited way only, until there is greater capacity in Balochistan and FATA to represent their interests competitively.
Annex 5: Government ownership and Balochistan
Recommendation 14: that measures are put in place for the PCNA ISUs to benefit from the considerable experience of PaRRSA.
Recommendation 15: that the Balochistan needs assessment should be strongly anchored in a rights-based approach, and stays simple as a first step to comprehensive assistance for Balochistan.
Recommendation 16: the TS should coordinate with UNDP to avoid duplication on Balochistan needs assessment
Annex 6: Progress against crosscutting issues
Recommendation 17: develop a clear citizen engagement strategy to enable effective delivery of government-run MDTF-financed projects and ensure that they are aligned to the needs of citizens.
Recommendation 18: have an indicator within the MDTF RF to monitor the effects of MDTF on FATA reforms.
Recommendation 19: it is strongly recommended that gender aspects are systematically included in project design.
Annex 7: Monitoring & Evaluation
Recommendation 20: Once TF baselines and indicators are established at programme level, the M&E system will need review. This should be included in the Operations Manual.
2. Costs and timescale
2.1 Was the project completed within budget / expected costs: N/A
Projects have not yet been implemented. Therefore not possible to say.
2.2 Key cost drivers
Spend across the three areas is: 62% Growth and job creation, 27% Improving local services and community support, and 11% Policy reforms and governance support.
For geographical location boundaries of spend have been allocated as: 53% KP, 35% FATA and 12%
Balochistan. These have been calculated by looking at the percentage of total population and adjusting it for crisis affected areas.
It is difficult to make an assessment as to whether these results are sufficient or on-track with expectations, as there are no milestones to benchmark them against. It is also not possible to state whether the spend across the three streams is correctly focused. There is however recognition that projects have not been chosen strategically.
13

2.3 Was the project completed within the expected timescale:
Discussed above. An expected timescale has not been clearly articulated however there is general agreement amongst donors and the recipient Government that delivery of projects is very slow.
For reasons mentioned above, the review assesses that expectations may have been unrealistic –
World Bank administered Trust Funds do not deliver on project results quickly – they have other advantages that appear early as picked up in the ‘wider results’. Yet short lead times were expected
(the EU funded its first tranche out of emergency funds). In addition to the result of reducing government processing time (the PC-1 waiver), review recommendations include both cutting Bank design time (by increasing capacity and reorganising workload) and realigning expectations to longer lead times.
3. Evidence and Evaluation
3.1 Assess any changes in evidence and what this meant for the project.
The evidence base is that developed in the PCNA. This is extensive and is still the basis upon which the projects are chosen, and designed. Much of it remains valid but it would be advisable to set PCNA evidence reviews as the situation is fluid and has changed since the PCNA was drafted.
3.2 Set out what plans are in place for an evaluation.
No plans at present for an evaluation. An evaluation is recommended when the RF has been completed and further disbursements have been made.
4. Risk
4.1 Risk Rating (overall project risk): High
Did the Risk Rating change over the life of the project?
N
The programme was rated as high risk from the outset and maintained this status.
I. Overall MDTF risk
There is no overall risk assessment for the MDTF as a mechanism, or for each of the 3 streams.
If the 3 new streams do become useful guiding focal areas for the MDTF, a risk assessment per stream could be developed that analyses all risks to expected results. The review believes that this would be overkill and recommends only that this is developed for the overall MDTF.
The OPCNA strategy does however consider risk mitigation measures for the MDTF as a whole to address overall risks in the challenging environments of KP, FATA and Balochistan. The Bank relies on
3 risk mitigating measures:
1. Intensified supervision
2. Delegation of decision-making authority to task teams and country-based officials
3. High-level management support within the Bank 10
To achieve these, the Fund Administrator commits itself to:

Adequate staffing of the TS – comment: this review considers this to have been inadequate – resourcing has been far too slow

Unlocking the spectrum of speed and flexibility in Bank operations – comment: use of OP.08 rapid response procedures has been applied to all projects; this commitment has been met

Use innovative measures – comment: as no M&E has yet taken place, it is not possible to
10 Implementation of the MDTF Engagement Strategy, February 2012, p.22
14

assess whether the Bank will indeed used the array of innovative technological monitoring means that it intends. However in recognition of the environment, the TS has developed a special monitoring agent function and is training youth in basic monitoring skills (outside of the
MDTF but considering application to MDTF projects).
II. Project risks
Project risk assessments and mitigation measures have been developed as part of each project design.
These have been looked at under ‘outputs’. The integral risk matrix (the ORAF) developed for each project is useful and there is evidence that even in early implementation stages, mitigation measures are being employed.
III. Risks for DFID
In terms of assessing risks for DFID, the most useful approach may be to apply DFID’s country risk matrix to the MDTF. It is beyond the scope of a review to establish risks (it requires far greater country expertise) and the review therefore recommends that DFID assess MDTF risks in context of its country
Partner, Climate change, Economic, Fraud & Corruption, Fragility & Conflict, Human Resources assessed risks. As a starting point, suggestions are presented in annex 1. Of note perhaps is that in the case that the Government interest in peace building in the border areas wanes, the TF reduces risk for DFID in general (programmes and relationship) by its ability to apply multilateral pressure.
Annex 1 also includes a comment on risks established in the DFID Programme document..
4.2 Risk funds not used for purposes intended
The World Bank have strong systems in place to ensure that the chances of funds being used for unintended purposes are minimised. The review team is content with the processes in place.
4.3
Climate and Environment Impact
The World Bank employs the Environment Social Management Plan to ensure climate and environmental considerations are recorded and constantly reported.
5. Value for Money
5.1 Performance on VFM measures
The project memorandum contained a short economic appraisal, flagging up that each project going through the MDTF would be subject to World Bank economic appraisal. The overall rationale for the project is explained as: i) To tackle equity concerns - NWFP and Balochistan account for 18% of Pakistan’s population, but only
14% of its GDP, and are the two poorest provinces of Pakistan. The development figures are also considerably lower than other parts of Pakistan; ii) To reduce transaction costs of donors and the Government by harmonisation of procedures; iii) High cost of conflict on Pakistan’s economy. Therefore if project can reduce conflict it will help promote growth for the whole economy.
As there were no targets or indicators used it is not possible to test whether the assumptions hold true.
However the analysis in this review does build upon these initial arguments and assesses VFM both at the individual project level and the overall programme.
Analysis
VFM of individual projects
15

At the project level VFM assessments have been conducted for the only two projects with an economic appraisal at implementation or very early implementation stage. Based on expected results, the analysis of both these projects finds that they will deliver good VFM.

KP Emergency Roads Project: Based upon a benefit flow from estimated reduction in travel time and increased flow leading to economic generation the KP Roads project found that the Net Present
Value (NPV) is $13.6 million (positive), and the IRR is 29.87%. A 12% discount rate was used 11 .

Economic revitalisation of KP and FATA: Economic analysis of this project finds the NPV of the project will approximately be US$ 32.57 million; with an economic rate of return of 44.1%. A discount rate of 12% was used 12.
Under the Emergency Project Procedures of the World Bank (OP 8.0), projects are not required to carry out an economic appraisal. This is a necessary step for VFM assessment downstream. Consequently it is not possible to say whether all the projects that have been designed, for example the governance support project that is being implemented, will deliver good VFM. There is a trade-off between having all the necessary checks in place before a project is approved and the desire to deliver projects quickly; the SC must consider the implications of a decision to include an economic appraisal carefully.
See recommendations.
Overall VFM assessment
This section uses DFID’s three Es framework: Economy, efficiency and effectiveness to conduct the overall assessment of whether MDTF is delivering good value for money.
Economy
Administrative costs: 7% is the standard rate used for World Bank trust funds as an administration fee.
This appears high and should be reviewed: DFID’s standard agreement with the World Bank is a 5% admin fee with a US$ 35,000 set up fee. The World Bank should be challenged to explain why 7% is therefore being used. (Recommendations in this report to upgrade the capability of the TS need to be taken into account in this discussion, as does the security environment in which the MDTF is operating).
See recommendation.
Project costs: the WB has a series of procedures in place to ensure input costs are a minimum; including procurement practices which involve the use of standardised market unit costs as a gauge to ensure quoted prices are appropriate. The review team did not investigate individual projects but was content with the WB’s systems to ensure project inputs are bought economically.
Efficiency
The efficiency of the MDTF in delivering results has been assessed against a number of areas:

Ability to design and implement projects quickly and effectively (disbursements)

Ability to reduce transaction costs of donors and the government (see above under wider benefits)
Disbursements: see 1.4 Analysis of results, for disbursement time span and comment.
Trust Fund disbursement is never quick: structurally there are number of steps between project design and implementation 13 . There are also challenges within the WB system such as TTL workload and flexibility 14 .
That said, there has been progress on reducing disbursement time in two areas:
1. Application of WB Emergency Procedures. This leave some things out of the usual design process
11 KP Emergency Roads Project Report, World Bank
12 Economic revitalisation of KP and FATA project report, World Bank
13 See annex 8
14 See section V of this report
16

in order to speed up disbursements.
2. A PC-1 waiver has been granted for MDTF projects that simplifies and shortens the approval process 15 .
However efforts still need to be taken to improve this if the MDTF is to deliver VFM. It is recommended that the process to reduce the number of stages and the time each stage takes should continue and that the TS should set and the SC should agree to timeframes for each stage. Ever effort should then me made to reduce these. Each project should then present to the SC how long each stage has taken and clear explanation given if it is longer than the agreed targets 16 .
Effectiveness
The goal of the MDTF is to “support implementation of a programme of reconstruction and development aimed at recovering from the impact of the crisis and reducing the potential for further conflict”.
Projects. As most projects are not yet at implementation stage, it is neither useful not really possible to assess the effectiveness of the MDTF at delivering its goal.
However the following evidence suggests that it is moving in the right direction:

All projects address needs identified in the PCNA

Projects are Provincial Government priorities

All projects are implemented in partnership with the Government, in support of state-building agendas, better results and sustainability.
To ensure / increase effectiveness, the MDTF needs to select projects more strategically. A portfolio of projects that build on each other, that are carefully sequenced, have wide buy-in and are incrementally perceived to be evidence of greater government capability, interest, responsiveness and accountability to its citizens will deliver greatest peace-building effect. This process takes time
– there is a trade-off between speed and effect – and was possibly not a luxury that the Fund could take in its early days.
Now however, with projects rolling out, a more strategic approach is the recommended way forward
(Option 1 in this paper) to deliver greatest value for Pakistan and for donors.
5.2 Commercial Improvement and Value for Money
As said under economy section the WB has a series of procedures in place to ensure input costs are a minimum; including procurement practices which involve the use of standardised market unit costs as a gauge to ensure quoted prices are appropriate. Though the review team did not do an in-depth review of this area the standard procedures that are globally used by the WB seemed to be sufficiently stringent.
5.3 Role of project partners
See assessment of project partner in economy, efficiency and effectiveness sections.
5.4 Did the project represent Value for Money:
At the project level in the two projects for which an economic appraisal was carried out and that are being implemented, the evidence available suggests that both projects are delivering good VFM. It is hard to assess whether other projects will be good VFM as no assessment has been made.
Overall the assessment is that the initial evidence on economy, efficiency (and equity) suggests progress is being made to deliver VFM; but with very few projects are in the implementation stage it is too early to assess clearly whether overall the programme is delivering good VFM. Moving forward the
15 See annex 5
16 See recommendation 5 in Section V
17

following action should be taken to ensure good VFM in this spend: i) All projects should have a VFM assessment before they are approved. Thoughts should be given as to how this can be done without slowing disbursement; ii) Speed of disbursement should be closely monitored, target timeframes for each stage should be agreed and reported to the SC for individual projects; iii) A clear RF with verifiable targets and milestones should be developed so that an assessment can be made as to whether the MDTF is on-course to deliver as expected. All results, including beyond individual projects, such as increased donor harmonisation, should be included in the framework.
6. Conditionality
The project Memorandum on March 2010 states under the conditionality section that:
‘The Secretary of State was consulted in February on a first contribution to the MDTF and conditions for subsequent tranche releases.
He agreed recommendations that decisions on whether to release a further £20 million to the MDTF be taken by senior officials and be based on an assessment of:

A fully developed results framework for the MDTF informed by the PCNA and other analyses and by dialogue with government on priorities;

Performance of the MDTF and implementers – up to £10 million in 2010/11 based on the first 6 months performance in responding to DNA priorities, and up to £10 million in 2011/12 based on performance in responding to PCNA priorities;
Approval of benchmarks for later tranche release will be sought once the results framework is finalised.
These will be monitored through the M&E processes described.
Update:
The chronology of disbursals is as follows:
 Initial tranche of £10m released in 2010 when submission approved. This was done in the clear knowledge that the RF and LogFrame had not been completed. Agreement to release further tranches in April 2011 and April 2012;

Release of April 2011 tranche delayed pending the development of an outcome based RF (2011 review recommendation);

2011 Tranche released at end of 2011 following the approval by the SC of an outcome based RF better linked to the PCNA, on the basis that progress in disbursal of funds was being made, that results were beginning to flow, and on the proviso that a six month action plan to be monitored by the SC be developed.
Although progress has been made and an approved outcome based RF is developed, there is not as yet a measurable RF. The final step is now to turn this RF into a measurable tool with targets and baselines. The review assesses that this is possible now that structural impediments have been exposed, donor expectations for measurability are clearly articulated and commitment to turning the
MDTF into a more strategic tool is not only shared by all stakeholders, but the implications and necessary actions that need to be taken to upgrade the MDTF in this way are understood by all.
The recommendations section in the results analysis outlines the steps required for this to occur.
7. Conclusions
Since the 2011 annual review, the Fund Administrator and the TS have been responsive, seeking to meet SC demands aimed at turning the Fund into a more strategic instrument and accelerating the
18

pace of disbursement. The MDTF now has an approved RF, a number of new strategies, and secured a PC-1 waiver. Despite considerable effort however, it has failed to regain the confidence of donors and Government.
The reason for this is that:
1. The changes required were of a non-technical order – they do not bring the MDTF closer to addressing conflict as expressed in the WDR 2011 – a strategic shift is necessary that requires a different mindset in the TS
2. Despite the strains within the system, and complaints, the capacity (skillsets, dedicated resources and internal organisation) of the TS has not been increased.
The review recommends a phased progression towards a more strategic planning process, and away from project-driven responses, and a significant upgrade of the MDTF TS. These are necessary to enable donors to reinvest in the Fund, to broaden the contributions base, to ensure the Fund’s viability and for it the Fund to deliver on its potential.
It is also highly recommended that Donors, the Bank and the Government corporately capture the lesson of this Fund (and others before it) that an MDTF is not a mechanism for quick disbursal of funds.
8. Review Process
The review spent 1 full week as a complete multi-donor team in Pakistan talking to key stakeholders
(it was not possible to meet the Government of Balochistan). It began and ended with a separate briefing and debriefing with the World Bank and Donors.
Name Designation
Government of Khyber Pakhtunkhwa
Mr. Saleem Khan Secretary Planning and Development
Organisation
Planning and Development
Mr. Asad Ali Khan
Raza Khan
PCNA Coordinator & Director, Project
Planning & Implementation
Chief Foreign Aid
Department
Planning and Development
Department
Planning and Development
Department
Shahzad Khan Bangash
(and team)
Director General Provincial Reconstruction,
Rehabilitation & Settlement
Anikah Khan Donors & Gender Coordinator
Authority (PaRRSA), Civil
Secretariat, Peshawar
Provincial Disaster Management
Authority/Provincial Reconstruction
FATA Secretariat
Fazal Karim Khattak
Shakeel Qadir
Government of Pakistan
Mr. Jamil Anwer
Dr. Iftikhar
Additional Chief Secretary FATA
Secretary Law and Order FATA
Joint Secretary, ADB
Deputy Secretary
Mr. Mumtaz Shah
Syeda Sughra Hussain
Deputy Secretary, World Bank
Senator, Advisor to the Chairman
Imam
Zafar Hassan Raza Member, Policy Research Wing
World Bank and Technical Secretariat MDTF
Mr. Rachid Benmessaoud Country Director for Pakistan
Mr. Robert Bou Jaoude Programme Coordinator
Rehabilitation & Settlement
Authority (PDMA/PaRRSA)
FATA Secretariat
FATA Secretariat
Economic Affairs Division
Economic Affairs Division
Economic Affairs Division
Prime Minister’s Secretariat
Prime Minister’s Secretariat,
World Bank
MDTF Secretariat
19

Nadir Abbas
Asma Farooq
Sher Shah Khan
Umbreen Arif
Haris Khan
Operations Officer
Communication Officer
World Bank, MDTF Secretariat
World Bank, MDTF Secretariat
Senior Governance Specialist World Bank
Task Team Leader, Balochistan Education World Bank
Task Team Leader, PDMA, Balochistan World Bank
Samina Mussarat Islam Task Team Leader, Gender Adviser
Uzma Sadaf Senior Procurement Specialist
Rehan Hyder
Saeeda Rashid
Syed Waseem
Kiran Afzal
Senior Procurement Specialist
Senior Financial Management Specialist World Bank
Financial Management Specialist
Private Sector Development Spec.
(Economic Revitalization of KP and FATA)
World Bank
World Bank
World Bank
World Bank
World Bank
Shahnaz Arshad Senior Urban Specialist (FATA Urban
Centers)
World Bank
Zafar Iqbal Raja
Jean Mazurelle Operations Officer
Donors and implementing agencies
George Turkington
Jane Edmondson
Damon Bristow
Head of Office
Governance Group Head
Team Leader (Conflict reduction and
Humanitarian Team)
Sakandar Ali
Dharini Nathwani
Senior Highway Engineer (KP Road
Project and FATA Rural Roads)
Governance Adviser, KP Focal Point
Deputy Programme Manager Planning and Results
World Bank
DFID
DFID
DFID
DFID
DFID
World Bank, MDTF Secretariat
Sarah Hawkes
Antje Grawe
Results Adviser
Counsellor
Economic Cooperation & Development
Dr. Anna-Christine Janke Director KfW Office Islamabad
Berend De Groot Head of Operations
Eva Atanssova
Esther Lonstrup
Petri Lehtonen
Mr. Altaf Afridi
Pelin Musabay
Timo Pakkala
Thomas R. Morris
Development Adviser, Governance and
Democratisation
Counsellor
Program Coordinator
Chief Economist
DFID
German Embassy
KfW Development Bank
European Union
USAID/Pakistan
Royal Danish Embassy
Embassy of Finland
USAID Project Development Specialist USAID, Peshawar
3 rd Secretary Embassy of Turkey
UN Resident / Humanitarian Coordinator SC Observer
20

Annex 1: Risk Tables
1) MDTF in context of DFID’s country risk matrix
Risk MDTF Mitigating Actions – non-exhaustive suggestions
Risk 1
Partner
Risk
Risk 2
Climate
Change
Diminished political will to deliver reform and results
Would lead to increasing dislike of the TF and its intent to keep reform & peace building on the govt agenda
Climate-related or other natural disasters

Link increased resources to progress on reform: The apolitical / multilateral nature of the TF presents opportunities to mitigate this risk in this way, without overtly straining relations: as such the MDTF is a risk reduction mechanism for DFID programmes

Close dialogue with donor partners: this is a wider benefit of the
MDTF

Risk that Govt may impede the work of the TF

Diversify portfolio; this is a given considering the areas of comparative advantage of the TF partners & a mitigating measure if Govt appetite for TF diminishes
 Increase bilateral and MDTF efforts to widen the Fund’s contribution base and multilateral value

Role of TF in response: experience of the floods – clear govt would seek alternative funding for disasters.

But TF has a role in prevention – Balochistan DRR facility

All projects should include DRR considerations: SC to table discussion
Risk 3
Economic
Economic crisis

A core focus of the PCNA is on employment and economic growth opportunities

Prioritise projects that straddle both PCNA and Provincial
Economic Growth Strategies
Risk 4
Fraud and corruption
Fiduciary risks to funds
Risk 5
Fragility and Conflict
Outbreak of conflict/ sustained increase in threat

Strong WB due diligence and procurement processes

Develop rigorous M&E

Monitoring Agents

Support FATA audit office
 Support capacity development of PG’s PCNA ISUs so that in time or in worsening circumstances they can implement programmes and oversee satisfactory M&E

Support development of a capability in Balochistan
Risk 6
Human
Resources
Inability to recruit and retain experienced DFID staff.

First: commitment on part of WB to recruit full-time staff to dedicated roles in support of MDTF
21

2) Risk matrix in Programme document and review comment
Risk Prob.
Impact
Med High
Mitigation Measure
1. Reconstruction and development interventions unable to commence or be completed due to continuing or renewed conflict

Likely that reconstruction can begin immediately in some reasonably secure areas

Conflict analysis and security assessment of investments and focus on those most likely to promote peace building

Negotiate with local authorities and communities on security provision
2. Rebuilt infrastructure destroyed due to recurrence of conflict
3. Implementation, supervision and M&E limited due to security concerns and restrictions on staff movements.
While the MDTF will aim to commence operations sequentially as security conditions permit, there will still be higher than normal security risks, and normal Bank and implementing partner activity may sometimes be impossible.
Low
High
High
High

Choice of sites to take into account likely recurrence of conflict;

As risk 1 – support reconstruction that promotes stability and security

MDTF financed activities will include a strategy for working in higher
‐ risk areas that will emphasise working through local partners and may include use of supervision consultants, monitoring agents, and security consultants to mitigate risk.

Task teams will make use of technology to facilitate supervision through local partners.
Low Medium
4. MDTF interventions fuel rather than reduce conflict (‘do harm’)

Rigorous conflict analysis as part of project appraisal and
M&E

Strict vigilance required with respect
22
Review comment

Risk not realised but

Need to ensure that the focus of the


Risk likelihood
 some delays in project development in FATA and
Balochistan as a result of poor security. programme remains on promoting peace.
No infrastructure currently built.
Still a risk.
Particularly true in B and F;

Not clear security strategy has been developed at MDTF level

A strategy to recruit and train Monitoring
Agents has been developed.

Possibility of accessing WB’s programme to train youth for M&E as well.
assessment appears reasonable.

Early days. As an indirect conflict risk -
No evidence of this.
However has been a complaint at
Provincial level that

Risk
5. Willingness/capacity of government to undertake governance and other reforms identified in the PCNA process.
Success in addressing longstanding development challenges in the region requires addressing governance issues linked to conflict.
However, such reforms are difficult and delay or impede MDTF-financed operations in FATA.
High High
6. Exclusion of key beneficiaries
Government agencies and WB may be unwilling and/or unable to involve or target excluded groups, in planning and implementation
Prob.
Impact
Medi um
High
Mitigation Measure to elite capture of projects

The International
Community and
Government to remain in a high-level policy dialogue through the
Friends of Democratic
Pakistan and the
PCNA about the need to address difficult reform issues. DFID is working closely with
FCO colleagues to ensure that development and diplomatic channels for advocacy reinforce each other and that advocacy is evidence based.
Review comment due to MDTF donors are not pursuing quicker bi-lateral projects.

Risk assessment is poor: significant reforms have taken place, and to date the Government has achieved far greater
PCNA related results than donors in complex reform areas.

Risks remain that more subtle reforms in KP are overlooked in favour of infrastructure projects.

Risk reduced due to the 18 th Amendment
–

MDTF is helping keeping the PCNA on the agenda.

We will ensure disaggregated indicators in the RF to drive action and M&E on this and lobby for inclusiveness on the basis of evidence on equity and grievances, including from the
PCNA. It must be a component of MDTF performance assessments governing tranche release.

The resourced ISUs, strategic communication will support the inclusion agenda.

Disaggregated M&E data is included in design

Inclusion at planning level has not progressed.
23

Risk
7. Slow implementation of
MDTF.
With the risk of reducing citizens’ confidence in an effective response.
Prob.
Impact
Medi um
High
8. Tight fiscal position leaves GoP unable to fund recurrent budgets associated with Trust
Fund investments.
Sustainability of projects will require that
GoP is able to take over recurrent financing of
Trust Fund investments.
Medi um
9. Funds mismanaged
High
Low High
Mitigation Measure

MDTF arrangements have learned from other MDTFs.

An ongoing strategic dialogue with donors and government through the MDTF governance arrangements will be used to develop and prioritize the project pipeline and secure donor funds.

The MDTF will include a technical assistance window to help develop local capacity alongside investments.

The scale of the
MDTF means that contracts can be packaged to attract national and perhaps international as well as local contractors

The process of recruitment of
Secretariat staff has begun and Bank staff are identifying projects for MDTF financing.
Review comment

Risk has materialised – opportunity for creating an effect has passed – slow trickle of funds will now not capture the public’s imagination.
This is also a result of hesitant donors support.

A TA project is bring set up

At this stage no projects have begun that require significant recurrent budget follow up funding

We will monitor the situation and ensure that recurrent budget implications are quantified and considered in budget allocation processes.
But the fiscal position itself is beyond the control of this programme.

The MTDF incorporates safeguards to ensure funds are used for their intended purpose with adequate accounting; monitoring and reporting procedures. WB
24


Risk Prob.
Impact Mitigation Measure procurement practices will be followed.
 DFID’s ongoing programme of capacity development support to North West
Frontier Province and the FATA Secretariat is helping improve public financial management. Will consider similar support in Balochistan if not covered by
MDTF.
Review comment
25