Ahsan Kamal
Irregularities in grant disbursement must be investigated further, and financial records for the housing grant disbursement should be made available for public scrutiny
In the midst of the multitude of crises food, fuel, environment, terrorism and, of course, the economy we must not forget the importance of a day that has just passed us by. Three years ago, on October 8, the worst natural disaster in our nations history left 73,338 dead and 4 million homeless. The 2005 earthquake changed the lives of those that survived, and those that came to help. There were shows of solidarity with the survivors who are still struggling to get back on their feet.
But these are mere gestures, and do not have any direct affect on our lives when there are other immediate concerns and issues. Why should we care? There are six billion reasons to be concerned.
Almost $6 billion, or Rs 450 billion (using current exchange rates), will be spent on earthquake-related projects, and the bulk of this amount will be spent by mid-2009. To comprehend the magnitude of this amount, consider that $6 billion is 7 percent of all government spending in this three-year period.
Half this amount is in the form of long-term low interest loan, further increasing our ever-growing foreign debt by almost 7 percent. This is money we, and future generations, will have to pay back.
So what is this six billion dollar plan?
Let us begin by looking at the current situation. The pace of reconstruction has been slower than expected. As of April 2008, $6 billion had been committed by donors and half of that had been disbursed. The government is failing to meet its targets: only half of the 600,000 damaged houses have been rebuilt, and work on the urban projects has not even started. A mere 3 percent of the 5,344 damaged schools, and 6 percent of the 586 damaged health units have been reconstructed. The mismanagement of an $85 million cash grant programme to support livelihood has resulted in alarming exclusion and false inclusion rates. Half the people getting the grant did not deserve it, whereas half the deserving never received the grant.
Before going any further, also consider the source of these funds and those responsible for spending it. On November 19, 2005, an international donors conference was held in Islamabad. Delegates from 75 countries and international institutions pledged $5.8 billion for relief and long-term reconstruction, exceeding Pakistans target of $5.2 billion.
The government established the Earthquake Reconstruction and Rehabilitation Authority (ERRA), an autonomous organization responsible for post-disaster damage assessment, reconstruction and rehabilitation. ERRA is directly responsible and accountable for every single rupee that is to be spent for earthquake related reconstruction projects. According to ERRAs website, its overall mandate is to plan, coordinate, monitor, and regulate reconstruction and rehabilitation activities...ensuring financial transparencies.
ERRA set to task and identified twelve different sectors housing, health and education being the major ones and came out with reconstruction strategy reports. The plans noted that implementation will be carried out by a multitude of actors, including the government, international and local NGOs, international organizations and foreign governments through bilateral agreements. Work would be largely completed by 2009.
Not all of this money will be spent directly by ERRA. Some was in the form of in-kind goods delivered during the relief phase, and some was provided in the form of loan re-adjustment deals. A large portion would be transferred directly from international organisations like the UN and international NGOs to local NGOs and organisations.
The housing sector was the hardest hit by the earthquake, with over 600,000 houses damaged; close to half a million of these were completely destroyed. An estimated $2.38 billion is to be spent on reconstruction work in the housing sector, a third of the total relief and reconstruction budget. Current disbursement figures suggest that a total of $1.56 billion will be disbursed through the housing cash grant, and $820 million will be spent on urban development projects.
The main ERRA policy was to use a cash-grants based, owner-driven reconstruction model. Surveys were conducted to determine the extent of damage, and people were given either Rs 175,000 to rebuild their houses, or Rs 75,000 for repairs. The grant was distributed in several instalments and strict design guidelines were given to ensure construction of earthquake-resistant structures.
What has this meant for the affected population?
First, the fixed total amount provided was not sufficient to meet diverse needs, depending on several factors including accessibility, cost of materials and social preferences. Second, due to the inefficiency of surveys and the grant distribution mechanism, people have been living in half-built structures, waiting for the next instalments of the grant.
A total of Rs 55.46 billion has been disbursed in the form of rural housing cash grants. As of August 2008, only 218,317 affected house owners had received all four tranches; and by received, we can only infer that the funds have been released from ERRAs account in Islamabad. Long transfer delays and lack of funds at local banks suggest that a smaller percentage of people are actually able to access this money.
Yet ERRA claims that over 400,000 houses have been completed by August 2008. This sudden jump from 237,000 completed houses in April 2008 seems unlikely, particularly as the total amount disbursed has only increased by $70 million, or Rs 4.22 billion.
A more serious issue is regarding reports of financial irregularities that first appeared in newspapers in February 2008. The office of the Auditor General of Pakistan conducted a review of ERRAs accounts and discovered financial irregularities of up to $11 million (Rs 655 million). Our independent study suggests that ERRA is misreporting progress and the discrepancies in numbers could point to a possible financial irregularity of $37 million.
Irregularities in grant disbursement must be investigated further, and financial records for the housing grant disbursement should be made available for public scrutiny.
ERRA notes that the International Development Assistance Mission of the World Bank carried out a mid-term review and rated ERRAs performance as highly satisfactory, scaled as the best ranking given by this institution. Clearly, a critical review of ERRAs performance and an assessment of on-ground conditions was not conducted.
Given the slow pace of recovery, it is unlikely that ERRA will meet its three-year targets, and survivors will continue to suffer. The lack of transparency and inefficient use of this money $6 billion suggest that we all, as taxpayers, will have to pay a big price in the future.
The writer is a graduate student at Columbia University. This article is based on the Ruins to Recovery report by RISEPAK
Irregularities in grant disbursement must be investigated further, and financial records for the housing grant disbursement should be made available for public scrutiny
In the midst of the multitude of crises food, fuel, environment, terrorism and, of course, the economy we must not forget the importance of a day that has just passed us by. Three years ago, on October 8, the worst natural disaster in our nations history left 73,338 dead and 4 million homeless. The 2005 earthquake changed the lives of those that survived, and those that came to help. There were shows of solidarity with the survivors who are still struggling to get back on their feet.
But these are mere gestures, and do not have any direct affect on our lives when there are other immediate concerns and issues. Why should we care? There are six billion reasons to be concerned.
Almost $6 billion, or Rs 450 billion (using current exchange rates), will be spent on earthquake-related projects, and the bulk of this amount will be spent by mid-2009. To comprehend the magnitude of this amount, consider that $6 billion is 7 percent of all government spending in this three-year period.
Half this amount is in the form of long-term low interest loan, further increasing our ever-growing foreign debt by almost 7 percent. This is money we, and future generations, will have to pay back.
So what is this six billion dollar plan?
Let us begin by looking at the current situation. The pace of reconstruction has been slower than expected. As of April 2008, $6 billion had been committed by donors and half of that had been disbursed. The government is failing to meet its targets: only half of the 600,000 damaged houses have been rebuilt, and work on the urban projects has not even started. A mere 3 percent of the 5,344 damaged schools, and 6 percent of the 586 damaged health units have been reconstructed. The mismanagement of an $85 million cash grant programme to support livelihood has resulted in alarming exclusion and false inclusion rates. Half the people getting the grant did not deserve it, whereas half the deserving never received the grant.
Before going any further, also consider the source of these funds and those responsible for spending it. On November 19, 2005, an international donors conference was held in Islamabad. Delegates from 75 countries and international institutions pledged $5.8 billion for relief and long-term reconstruction, exceeding Pakistans target of $5.2 billion.
The government established the Earthquake Reconstruction and Rehabilitation Authority (ERRA), an autonomous organization responsible for post-disaster damage assessment, reconstruction and rehabilitation. ERRA is directly responsible and accountable for every single rupee that is to be spent for earthquake related reconstruction projects. According to ERRAs website, its overall mandate is to plan, coordinate, monitor, and regulate reconstruction and rehabilitation activities...ensuring financial transparencies.
ERRA set to task and identified twelve different sectors housing, health and education being the major ones and came out with reconstruction strategy reports. The plans noted that implementation will be carried out by a multitude of actors, including the government, international and local NGOs, international organizations and foreign governments through bilateral agreements. Work would be largely completed by 2009.
Not all of this money will be spent directly by ERRA. Some was in the form of in-kind goods delivered during the relief phase, and some was provided in the form of loan re-adjustment deals. A large portion would be transferred directly from international organisations like the UN and international NGOs to local NGOs and organisations.
The housing sector was the hardest hit by the earthquake, with over 600,000 houses damaged; close to half a million of these were completely destroyed. An estimated $2.38 billion is to be spent on reconstruction work in the housing sector, a third of the total relief and reconstruction budget. Current disbursement figures suggest that a total of $1.56 billion will be disbursed through the housing cash grant, and $820 million will be spent on urban development projects.
The main ERRA policy was to use a cash-grants based, owner-driven reconstruction model. Surveys were conducted to determine the extent of damage, and people were given either Rs 175,000 to rebuild their houses, or Rs 75,000 for repairs. The grant was distributed in several instalments and strict design guidelines were given to ensure construction of earthquake-resistant structures.
What has this meant for the affected population?
First, the fixed total amount provided was not sufficient to meet diverse needs, depending on several factors including accessibility, cost of materials and social preferences. Second, due to the inefficiency of surveys and the grant distribution mechanism, people have been living in half-built structures, waiting for the next instalments of the grant.
A total of Rs 55.46 billion has been disbursed in the form of rural housing cash grants. As of August 2008, only 218,317 affected house owners had received all four tranches; and by received, we can only infer that the funds have been released from ERRAs account in Islamabad. Long transfer delays and lack of funds at local banks suggest that a smaller percentage of people are actually able to access this money.
Yet ERRA claims that over 400,000 houses have been completed by August 2008. This sudden jump from 237,000 completed houses in April 2008 seems unlikely, particularly as the total amount disbursed has only increased by $70 million, or Rs 4.22 billion.
A more serious issue is regarding reports of financial irregularities that first appeared in newspapers in February 2008. The office of the Auditor General of Pakistan conducted a review of ERRAs accounts and discovered financial irregularities of up to $11 million (Rs 655 million). Our independent study suggests that ERRA is misreporting progress and the discrepancies in numbers could point to a possible financial irregularity of $37 million.
Irregularities in grant disbursement must be investigated further, and financial records for the housing grant disbursement should be made available for public scrutiny.
ERRA notes that the International Development Assistance Mission of the World Bank carried out a mid-term review and rated ERRAs performance as highly satisfactory, scaled as the best ranking given by this institution. Clearly, a critical review of ERRAs performance and an assessment of on-ground conditions was not conducted.
Given the slow pace of recovery, it is unlikely that ERRA will meet its three-year targets, and survivors will continue to suffer. The lack of transparency and inefficient use of this money $6 billion suggest that we all, as taxpayers, will have to pay a big price in the future.
The writer is a graduate student at Columbia University. This article is based on the Ruins to Recovery report by RISEPAK
