Pakistan: The Aga Khan Rural Support Program

Summary

Publication date: 12/11/95

Contents

Introduction

This summary highlights the main findings of the OED evaluation of AKRSP. The implications of these findings for the future direction of the Program are elaborated in more detail in Chapter 7 of the report, "Future Direction and Outlook."

AKRSP, in its 13th year of operation, continues to be an effective instrument to improve the productivity of communities in the Northern Areas and Chitral, and the welfare of families in these communities. This has resulted from its interventions in productive investments, production-support investments such as access roads, training, and financial and technical services. A key element has been institutional development at the village level—village organizations (VOs) and women's organizations (WOs)—which has provided the framework to organize the energies of community members to avail themselves of outside assistance, as well as to direct their own resources into more productive endeavors.

Not all of the positive changes which have accrued in the Northern Region are due to AKRSP. Many non-Program investments and activities have contributed to development. The Karakoram highway is a prime example, and other government and nongovernment investments and services have played a role in social and economic change. Nevertheless, AKRSP has demonstrated that an external agent can facilitate the organization of communities to develop their own self-help capability, provided that agent has the appropriate strategy and the facilities and staff to implement it effectively.

AKRSP has reached a stage where it needs to take a hard look at where it stands vis-à-vis the current stage of development in the North, and what its future role should be in attaining its objectives of sustainable and equitable development. The coverage of the rural population through VOs is already very high in the district of Gilgit (where nearly three-quarters of households are members) and is about two-thirds in Chitral and Baltistan. In the remaining parts of these regions and in the district of Astore, which was only recently included in the Program, there is still opportunity to continue and expand the traditional AKRSP activities. However, in the districts in which AKRSP has been active for longer periods, a different set of issues needs to be addressed: how to ensure that the savings and credit mechanisms are sustained after AKRSP? how to strengthen VOs/WOs so that they can function as semi-permanent entities for the good of all community households? how to organize and fund further major productive and social infrastructure which is still sorely needed? how to manage natural resources to realize their potential in contributing to sustainable development? and how to stimulate local entrepreneurial capacity to enhance the area economy?

These issues gave rise to the appointment of a Strategy Development Committee (SDC) in 1992 to assist the owners and Board of AKRSP in defining the appropriate future direction and scope of the Program. The OED evaluation mission examined these same issues and the proposals of the SDC which were being finalized at the time of the mission. The evaluation also reviewed the impact of the Program to date, and the efficiency and effectiveness of its various development instruments.

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Program impact

As comprehensive household income surveys were only first undertaken in 1992, these do not provide a basis for an overall quantitative assessment of the impact on the targeted population. However, AKRSP has intensively monitored the implementation of its development instruments and done numerous studies to evaluate their effectiveness. This and secondary data provide a reasonable basis for Program evaluation.

Average household income appears to have almost doubled in real terms during the Program implementation period (para. 2.7). The basic production system of most households which is a mixture of agricultural/livestock production and off-farm, often nonagricultural, use of the family labor has not changed. However, agriculture is still usually the major source of household income, and improvements in agriculture have made a major contribution to income improvement (para. 2.13). AKRSP has been a partner in this agricultural development.

The area under crops has substantially increased due to productive physical infrastructure projects (PPIs) which have enhanced the supply of irrigation water; this has been important for the expansion of cash crops such as fruit trees and vegetables, but also for forestry which has a longer term benefit, and for alfalfa as a fodder crop for livestock production (para. 2.11). The enhanced ability to procure inputs and dispose of outputs through Program services and by improved village access has complemented the improvement in resource base to enhance productivity and reduce the unit costs of production.

Credit has been made easily accessible so that households have been able to purchase more production inputs and hold their produce to gain higher prices. The women members of households have benefited from special programs through WOs, including vegetable and small-scale poultry production, and have realized a degree of independence by having their own personal savings accounts (paras. 2.19 - 2.28).

However, not all of the activities of the Program have been equally successful, and major adjustments need to be made to improve the effectiveness of some development instruments. Also, the persistence of the typical household economy model, in which nearly half of the income is non-farm related, emphasizes the need to examine longer-term prospects and opportunities in designing support strategies.

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Equity issues

The Gilgit region has more complete coverage than other areas, which is largely related to its longer period of participation in the Program. It also has more economic development, but this can be linked to its location which provides more opportunities than the other regions. However, overall, AKRSP appears to be substantially meeting its objective of equitable distribution of development opportunities among regions, communities and households (paras. 2.34 - 2.36). This does not mean that benefits have been distributed equally, but differences can be largely explained by variations in the level of resources available to, and in the initiative of the leadership within, a community or household.

AKRSP aims at: (a) improving the welfare and income of the majority of households, (b) ensuring that its grant and any subsidized support are, indeed, equitably distributed, and (c) undertaking specific programs which are targeted to improve the conditions of those who appear unable to benefit from available opportunities without special assistance. Performance is satisfactory in all three functions, and the whole women's program is an example of the latter function. However, continued vigilance is required in monitoring this aspect of AKRSP support within communities.

The PPIs in communities are often land-based (e.g., irrigation channels and new crop land) and are distributed equally to all landholders, with favorable effects on resource distribution. However, although the Northern Region is unique in Pakistan in having virtually all rural households who rely on income from agriculture actually owning land, situations could arise in which poorer households do not own land and do not share in land-based PPI benefits; this would require special interventions to realize AKRSP's equity objective (para. 2.40). Similarly, the uptake of services also warrants careful monitoring to ensure that those with more resources do not capture an inappropriate share (para. 2.43).

Within households, despite the creation of WOs and significant advances in a targeted program to assist members, it has been more difficult to effectively provide equal opportunities to all women. Illiteracy and religious and cultural factors inhibit change in the traditional role of women, more so in some locations than others, and the Program has to be realistic in estimating the pace at which change can be achieved. Nevertheless, programs should be carefully designed and monitored to be responsive to these constraints wherever this is feasible (para. 2.46). More targeted programs may be warranted to reach the less fortunate women in communities.

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Village organizations

There is a growing realization of the value of the VO concept. GOP has agreed to use the VOs as the instrument to channel its national Social Action Program in the Northern Areas; the Chief Secretary of the Northern Areas has instructed line departments to maximize use of VOs in implementing government programs; and GOP recently used the VOs and AKRSP to distribute rehabilitation funds following the disastrous rains of 1992. As many VOs have been in existence since 1982 and 1983, it could be expected that these would have matured into stable self-sustaining entities if the objective of their acting as continuing self-help institutions is realistic. In practice, there are many which now exhibit these characteristics, especially in some areas of Gilgit region, but also successful VOs are found in the other two regions. However, the majority still need assistance if they are to realize their potential.

Improving the skills of individuals and the leadership in VOs will help, but the most important factor determining their future will be a perception in the community that the VO will continue to provide significant benefits which are not likely to be obtained by other means. The initial benefits have been very obvious, but the task is now to verify and demonstrate that the longer-term benefits from continuing with the institution are worthwhile. Advantages could be in the form of (a) more effective interaction with outside agencies to acquire benefits and services for the majority, (b) greater access to capital resources for productive or consumptive use through sustainable savings and lending arrangements, (c) organization of the use and maintenance of common and shared property, and (d) providing a mechanism for resolving internal or inter-community disputes.

An important development has been the linkages which AKRSP has encouraged between VOs and outside agencies to allow VOs to capture more development and social services (paras. 3.21 - 3.33). To fully realize this potential, however, AKRSP will have to be perceived as having no biases and providing no preferential treatment to any particular area, sect, or type of community. Despite the potential advantages of these linkages, it should not be assumed that a government agency can simply substitute for an NGO like AKRSP in implementing effective dialogues and action programs with communities through the VO. It is likely that AKRSP will have to provide training to relevant government agencies if this mechanism is to be used effectively (paras. 3.25, 3.33 and 5.16).

Formalization of the status of VOs has legitimately been avoided to date to maximize the perception by communities that VOs are their own institutions. However, in view of the emerging role of VOs as partners in GOP investment programs, and as entities involved with the proposed NRDB, it appears necessary that consideration now be given to the adoption of some legal or quasi-legal structure (para. 7.17).

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PPI program

The PPI program has had a substantial economic development impact, and has been very effective in providing the basic incentive for communities to form VOs and enter into development partnerships with AKRSP. However, the program has slowed down in recent years, especially in areas which have had longer exposure to AKRSP activities (para. 3.45). Although many VOs have been able to avail themselves of additional investment support from AKRSP by being involved in multi-community "cluster" projects, and by participating in such programs as forestry development contracts, the policy has been to limit the PPI grant to a single investment. This is consistent with the objective of fostering a self-help attitude and avoiding the dependency syndrome. However there is obviously a big potential to accelerate development by more infrastructural investment. This is especially so for irrigation development, as this not only expands the productive resource base, but also allows the use of higher value crops, both of which have demonstrated their contribution to Program benefits.

This suggests that AKRSP should become more proactive in identifying additional infrastructure investments which (a) provide substantial common good, (b) are beyond the capacity of the community to initiate and fund by itself, (c) are of a type where the VO labor resource could make a significant contribution, and (d) would be amenable to VO operation and maintenance responsibility subsequent to construction. This is consistent with the wider area planning function envisaged for AKRSP's engineering section (PIES). The latest SDC paper proposes an expanded program and assumes that funding would be largely provided by government, bilateral and other NGO programs complementing community contributions in cash, in kind, or as borrowed money. However, there are likely to be many situations in which a grant from AKRSP would make a funding package viable, and would give the Program greater leverage to ensure efficient implementation and the opportunity to influence any equity considerations which might be warranted. Such participation should not exacerbate dependency, as the communities would be active contributors and be responsible for eventual operation and maintenance (paras. 3.53 - 3.55)

Success in involving VOs with government agencies in this type of productive or social infrastructure would do much towards introducing a system which allows communities to become directly involved in the local and regional planning process.

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Natural resource management (NRM)

Important new technologies have been introduced in fruit, vegetables, potatoes and forestry, and significant advances have been made in animal health and poultry production (paras. 3.76, 3.77, 3.89 and 3.103). However, much less impact has been obtained in cereals and animal nutrition, which are the major users of resources available to rural households (paras. 3.67, 3.73 and 3.74). The evaluation considers that significant improvements can be made in the NRM program, and greater emphasis should be placed on it in the next phase. This is also in accordance with the recommendations of the SDC and with the thinking of senior staff and management in the organization. Improvements can be made in the techniques used to identify needs of different types of farming households, and to generate relevant technologies to meet these needs.

A greater understanding of the constraints and potentials of households in the major categories of production systems should not only influence technology development, but also the whole dialogue process through which AKRSP plans its interventions with communities. The relatively standard solutions to problems identified in dialogues suggest that the responsiveness of the process is less than it should be, especially when some of the "solutions" have achieved only low levels of adoption (paras. 3.67, 3.72 and 3.94).

Recent initiatives have attempted to make the Program more responsive to local needs by decentralizing it to the regions and ultimately to Field Management Units (FMUs) (paras. 5.6 and 5.7). While this appears logical, the difficulty of attracting and retaining skilled and well trained staff has to be taken into account in locating personnel, and in formalizing the linkages between different levels in the NRM organization. Nor does the evaluation team believe that, on its own, this will be enough to instill the required farming system perspective in NRM staff, and meet the requirements for more appropriate technology development.

Suggestions are made for an approach which involves key farmers in the design and evaluation of results of experimentation (paras. 3.124 - 3.132). This, however, would require more staff and funding than is currently envisaged. Nevertheless it is sufficiently important to warrant its consideration as a specially funded project. It is also possible that international entities which specialize in this field may be interested in collaboration. A relatively high profile project with international collaboration may be able to overcome the problem of retention of quality staff in NRM. Linkages with the national research system would also be essential to ensure the long-term sustainability of the adaptive research investment, and the possibility of contracting out parts of the adaptive research program to entities with comparative advantage should be considered.

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Human resource development

AKRSP has made a major contribution in human resource development through its training programs. The concept of training villagers in specific fields so that these individuals will continue to provide services within their communities has been a key element in the AKRSP strategy.

However, results have not been uniformly good, particularly in the technical fields (paras. 3.63 and 3.135 - 3.137). Where the specialist provides a service which is generally appreciated as a specialized skill, such as budding/grafting of fruit trees, or involves a skill and incurs a cash cost, such as the administration of vaccines or drugs, there is a greater willingness for other members of the community to pay the individual for services rendered. There is less willingness to pay for general agricultural advice. It has also been difficult for AKRSP staff to adequately support the specialists. AKRSP has responded to this situation by recently focusing a lot of attention on the development of "master trainers" (paras. 3.138 - 3.142). This involves more intensive training of selected specialists to increase their skill level, but also assistance to carry on a business associated with the specialized skill area, such as the supply of inputs as vaccines or pesticides. This program promises to add a permanence to the technical service system, as these master trainers should consider it in their interests to continue to enhance their skills, and to provide appropriate advice along with their provision of inputs. They are also likely to solicit the cooperation of the more numerous specialists who would be represented in most communities. However, after AKRSP terminates its intervention, it will still be necessary to have a technical support system for such experts. This emphasizes the need to increasingly promote linkages not only with private sector providers but also with government departments which can provide some relevant support in the future.

Realization of the intended role of VOs as full partners in development will be enhanced if there is a greater depth of management training in VOs. In addition, the future program is likely to imply cooperation by a number of VOs in larger projects in many instances, and a cadre of managers with special skills will be needed to assume leadership roles in a multi-community setting. The proposed new developments in village banking will require substantially expanded training of selected individuals in accounting and management (paras. 3.143, 3.190 and 3.204). This program will also need more intensive follow-up support in the field if it is to realize its full potential.

Another important aspect of human resource development relates to the training of AKRSP staff. It has always been the policy of the institution to recruit local staff to the maximum extent possible. However, in the case of senior staff positions it has been necessary to recruit non-northerners in many instances due to the scarcity of suitably trained local candidates. This approach was legitimate, but AKRSP has probably not placed sufficient emphasis in the past on ensuring that local staff are given preferential advanced training opportunities so that they can assume senior posts in their local area. Had this been done in a concerted program, some of the recent staffing difficulties referred to below might have been avoided. This matter, however, has recently received management's attention, and appropriate scholarship arrangements are in place (para. 5.5).

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Marketing

The marketing program has evolved considerably. The earlier emphasis on cooperative marketing has decreased, and the focus is now more appropriately on improving the skills of producers in handling, processing and presenting their produce, and providing linkages with established markets and/or traders (para. 3.153). The two cooperative marketing ventures which have been established have been beneficial in achieving higher prices for their members, as both involved products which were particularly suited to this type of intervention. However, both (BAMA and GAMA) still need nurturing to ensure that business acumen is adequately instilled in management (para. 3.151). The Marketing section has also expanded its horizons into promoting the establishment of nonagricultural business enterprises, such as village guest houses to capitalize on the potential tourist market, and changed its title to Enterprise Development Division (EDD) in 1992.

The proposed creation of an Enterprise Support Company (ESC) will necessitate a clear definition of responsibilities for this and the EDD.

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Savings and credit

The savings and credit program has contributed to the establishment of VOs as useful community institutions, and facilitated economic development by making credit accessible to the majority of the population in the Program area. It has been a flexible and responsive instrument which has evolved as it learned from experience. The VO/WO credit program introduced in the 1990s has been particularly effective in involving communities and households in the credit process. However, there is a trend of deteriorating repayment performance in AKRSP's credit portfolio which must be monitored closely (para. 3.174).

The proposal to formalize the savings and credit program in a bank specifically for the Northern Region (NRDB) is appropriate. It provides the opportunity to build on the relatively good performance which this instrument has enjoyed to date, and to create a permanence which is needed to provide continued financial support for local development. Successful establishment of this institution, however, will require increased professionalism in financial intermediation (paras. 7.35 and 7.36). This will include a shift in strategic focus from meeting credit needs to creating debt capacity, building financial information systems, and introducing other measures to control and manage risk, improving operations support and training at the VO/WO level, and increasing controls and other internal prudential oversight.

NRDB's unique financial structure in having grant equity which does not have to yield dividends for shareholders provides it with several options to increase its outreach to clients. First, it could undertake more lending by offering longer-term loans. This would increase the risk in its portfolio, as risk is created by longer-term commitments. It would require a high level of market and client information. Second, it could take advantage of the low cost of NRDB's funding by subsidizing lending for particular types of investment. Subsidized lending was suggested by the Program's consultants for social infrastructure projects with a large "common good" element. This, however, can create expectations which are hard to contain, and create incentives to deal with losses in a non-transparent way. The inclusion of a transparent grant element in an investment package to make a loan on regular terms more viable may be more appropriate. Finally, NRDB could choose to subsidize savings through attractive interest rates and staff costs required for an aggressive savings program. Since all VO/WO members save, and because others in the area also save, a subsidy for savings would benefit the greatest number of people (paras. 7.47 - 7.51).

The Enterprise Support Company (ESC) is intended to finance investments which potentially have high social and catalytic benefits, but which carry excessive risk for a regular lender. Its business projections show that it is unlikely to be profitable. Some of NRDB's annual profits will be transferred to ESC's equity. It also has a number of features which allow it to interact effectively with local markets and entrepreneurs. This is a challenging role which will require very skillful management. If failure to repay, for any reason, is widely witnessed and not effectively dealt with, some of those who are in a position to repay may decide to attempt to evade repayment. One way to avoid formation of this culture is to try to ensure that borrowers stand to lose more than lenders when loans are not repaid.

Because of the importance of containing any expectation of debt forgiveness, it may be more appropriate to include in ESC the social infrastructure lending currently proposed for NRDB, as this appears to be the most problematic activity proposed for the bank (para. 7.54).

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Gender issues

The WO has proved to be an accepted and viable forum for village women's participation in the development process in the Northern Region, and it should be strengthened in the next phase of AKRSP's work (paras. 3.9 - 3.20). While requests from new communities should be met, the program should now focus upon quality of interaction with the existing WOs, along with encouraging more household coverage in each community.

Improvement in staff monitoring and follow-up of the WOs is called for, and more flexible implementation of various packages is also necessary. AKRSP's activities in the area of appropriate technology should be carefully reviewed. The introduction of viable labor-saving technology which is accepted by the local populace is crucialespecially for womenbut has not been very successful to date (paras. 4.23 - 4.25).

In introducing Program activities of a more sophisticated financial nature, it will be important that women are not left out of the process (para. 4.41). This calls for intensive training of selected women from WOs in entrepreneurial skills. At the other end of the continuum of WO membership are the vulnerable women of poor households. These women, who are most in need of assistance, are often left out of WO activities, and this problem needs special attention.

The linkages which AKRSP has been encouraging between VO/WOs and government, and NGO agencies in health, water supply and education are especially beneficial to women (paras. 4.51 and 4.52). AKRSP, through the WO vegetable and poultry packages, has directly enhanced household nutrition and provided a source of cash income for many women (paras. 4.26 - 4.32).

Integration of gender-related staff and activities into the mainstream Program should be continued, but not without careful planning and constant evaluation of this complex process. The role of the WID Monitors in each region will be especially important in monitoring the effects of the integration process. Additional gender-related workshops should be organized to encourage open discussion of difficulties which will inevitably occur (paras. 4.47 - 4.50).

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Management, organization and governance

The new management of AKRSP has already demonstrated a capacity to address management, personnel and operational issues effectively. However, a number of significant morale problems are affecting productivity. These will have to be quickly addressed if AKRSP is to return to its former levels of efficiency. In the process of implementing AKRSP's emerging strategy, open communication between all levels of staff and management will be essential.

An expanded role for AKRSP as a facilitator or catalyst is appropriate, and should enable increased and more effective development investment in the Northern Region. To maximize the potential benefits of this role, however, AKRSP will have to maintain a reputation as an unbiased, nonsectarian, development support institution. A completely transparent structure and relationship between its owners, its Board and its management will support its position. The emergence of the two new institutions, NRDB and ESC, make this transparency even more essential, as these will involve control over considerable financial resources in the region.

MER has accumulated extensive evaluation data especially over the last five years, which has the potential to allow management to make more informed decisions on Program strategy and content. However, this wealth of information is not being properly utilized. Of particular importance is the household income and VO/WO performance data. This can make a very useful contribution to developing greater understanding of the circumstances of different types of households in the various parts of the Program area, which is necessary to develop a total household perspective when considering project interventions. Categorization and description of the population should feed into most types of training and into the formulation of AKRSP's longer-term and annual programs.

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Replicability

Debate continues on the extent to which the AKRSP model is replicable. However, while it is unlikely that the experience can be, or even should be, transferable in every component, there is little doubt that its principles are widely applicable. This is proven by the fact that they are being actively used in other programs in, and beyond, Pakistan.

AKRSP must be considered a successful program. It has made a substantial development impact in a very difficult environment. It has not attempted to maintain an enclave development approach, but has progressively integrated into the overall development process, with government and other investors. This, and the principle of insisting on developing a self-help capability with cooperating communities, augur well for sustainability of its impact.

The Program has imperfections. However, these can be addressed through adjustments in policy and in resources allocations. It is hoped that this evaluation will make a contribution to these adjustments. The next phase of the Program will give birth to a new series of problems and challenges. However, with a clear strategy and the appropriate relationships between staff, management, the Board of AKRSP's institutions and their owners, and the donor community, the successes of the Program should continue.

The recommendations and suggestions of the evaluation team for the future direction of the Program are further elaborated in Chapter 7.

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Hari Srinivas - hsrinivas@gdrc.org
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