ADB to provide $5m assistance to Pakistan

The areas identified under the rural enterprise modernization project for the technical assistance loan are Multan, Theri (near Khairpur), Charsadda and Quetta. The technical assistance will help stabilise and increase wheat yields in the project rain-fed and irrigated areas, develop robust private companies providing agricultural services in the three project districts, and improve domestic wheat flour quality.

According to the Project Administration Memorandum, the total project is estimated at $6.5 million. The government has agreed to provide $1.5 million, or 23 per cent of the project cost, to meet part of the local currency expenditure.

The loan embodies a three-pronged strategy aimed at identifying key opportunities for local, non-farm rural growth; focusing on sub-sector-specific supply chains and constraints on expansion; and building diverse, flexible coalitions among partners that have interest in achieving results.

The loan has three components: Market Development Preparation (MDP); sector analysis and pilot interventions, and preparatory analysis for the design of a Rural Enterprise Modernization Company (REMC).

The Memorandum says the ADB technical assistance loan is a unique initiative to strengthen rural non-farm enterprises and will complement the interventions of Small and Medium Enterprise Sector Development Programme (SMESDP) and Agribusiness Development Project (ADP). The loan will focus on investigating and developing the latent potential of business groups in the rural non-farm economy.

The overall objective of the technical assistance loan is to create and diversity job and income-earning opportunities in the project areas, particularly for the landless, wage earners, and women. The purpose is to develop market facilitation processes by identifying and strengthening market gaps within selected sub sectors project area, and enhance the competitiveness of the target groups by facilitating access to a range of Business Development Services (BDS) including appropriate technologies and financial capital, says the memorandum.

The technical assistance loan will help analyse opportunities in designing innovative institutional arrangements and access the feasibility of establishing a not-for-profit company that would serve as a focal point for initiatives to support the development and growth of rural business.

Initiatives under the loan will be aimed at enhancing the competitiveness of small businesses by enabling them to improve the quality, standardisation, volume, and value addition of their products, and to serve more effectively a larger consumer base and niche markets.

Rural enterprise modernisation will also entail increasing awareness among Micro and Small Enterprises (MSEs) about BDS and related social and environmental safeguards, and identifying and enabling access by rural business to a range of appropriate BDS, technologies and financing, all customised to match rural MSE absorptive capacity and business potential.

ADB says efforts will be made to contribute to the promotion of socially responsive initiatives through pilot interventions. Capacity building and awareness measures, among others, will be included to ensure that ILO Conventions 182, 138 are not breached. Experiences with Pakistan, particularly in Sialkot provide useful insights. International companies sourcing sports goods from Pakistan have appointed NGOs and other groups to monitor labour practices in MSEs making soccer balls in Pakistan.

The executive agency for the project will be Ministry of Industries, Production and Special Initiatives, which will be responsible for overall project facilitation, management and monitoring. SMEDA will be the implementing agency responsible for Market Development Preparation and Sector Analysis and Pilot Interventions.

SMEDA will oversee the establishment of REMC, subject to ADB’s approval of its establishment.