COMPETITIVENESS SUPPORT FUND

Background:

Established as a joint initiative of the Ministry of Finance (MoF), the Government of Pakistan and the United States Agency for International Development (USAID), CSF supports Pakistan’s goal of a more competitive economy by providing input into policy decisions, working to improve regulatory and administrative frameworks enhancing public-private partnerships within the country. CSF also provides technical assistance and co-financing for initiatives related to entrepreneurship and the private sector with research institutes, universities and business incubators that contribute to creating a knowledge-driven economy.

CSF will carry out a study of various industries presently existing in Sindh to evaluate their competitive advantage. CSF will also identify new sectors which may have competitive advantage, that currently do not exist in Sindh.
CSF will provide technical assistance and co-financing through its various windows for to private-sector led initiatives with research institutions, universities and business incubators that will contribute to creating a knowledge-driven economy.
A Monitoring and Evaluation system will be jointly developed and implemented by the Sindh Government and CSF to ensure successful and timely completion of selected projects. In this context, a Sindh Roundtable on Competitiveness (SRC) will be set up as a platform to promote public-private and academia partnerships on competitiveness and help effective implementation of selected programs and projects in the province.
The SRC will comprise of 10-12 members with approximately 2-3 high-level representatives from the government, the private sector and academia. As one of the major donors of CSF, USAID will also be a member of the SRC.
To avoid duplication of efforts made by other donor/aid agencies operating in Sindh, their representatives will be invited as observers to the SRC meetings to help develop synergies between various programs.
The SRC will be chaired by the Chief Secretary of the Sindh Government and CSF, and it shall meet at least twice a year to evaluate the progress achieved by the recipients and to discuss the upcoming initiatives in Sindh.
Based on the outcomes of the SRC and deliberations of CSF and GoS, a detailed action plan will be developed for the proposed joint activities along with their budget estimates.
A workshop will be held for all the stakeholders from the government, academia and the private sector to put forward and discuss potential activities that may be pursued jointly by the Sindh Government and CSF. This MoU will be operative for a period of three years from the date of signing and may be extended by mutual consent of both parties who are signatories to it.









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ACTION PLA

MEETING OF CSF AND GOVERNMENT OF SINDH, FEBRUARY 06, 2007

PURPOSE

Representatives of the Government of Sindh (GoS) and the Competitiveness Support Fund (CSF) met to discuss implementation of the MoU that has been signed between the two institutions. The purpose of the meeting was to reach a provisional agreement about the priorities and modalities for implementing the MoU which enables CSF to provide assistance to GoS for improving competitiveness of Pakistan’s economy in general and Sindh in particular.

PARTICIPANTS OF THE MEETING

The meeting was chaired by Mr. Nazar Hussain Mahar, Additional Chief Secretary and his team comprising of officials from various line ministries of GoS. CSF was represented by Mr.Arthur Bayhan, CEO and his technical staff.

BACKGROUND

The Sindh province has considerable competitive advantages, not least because of the location of the major city of Karachi. The city provides an industrial hub and population centre with a full range of manufacturing and related satellite industries; it is also the major export port and thus serves the entire nation. Hyderabad is another important city on the major route north and is a center for trade and exchange.

For areas of Sindh outside Karachi the picture is less advantageous. Whereas the Northern Areas of the province have access to irrigation water from the Indus River (which flows through Sindh to the Arabian Sea), the coastal areas are deficient in fresh water. Northern Sindh has a productive agricultural system (e.g., in horticulture and commodity crops). However, on the coast, fishing, livestock rearing and subsistence agriculture remain a way of life. In many such areas education and health services require improvement and labour skills are lacking. Basic infrastructure needs upgrading (especially link roads) and industry needs water, electricity and communications to be profitable. Nevertheless, there are considerable niche opportunities for rural development and these are being tackled by a number of donor agencies and NGOs (e.g., WWF with mangroves, Sindh Rural Development Project with roads).

MANAGEMENT

CSF suggested moving towards implementing the signed MoU via an agreed Action Plan that would set the priorities of the activities to be undertaken jointly by GoS and CSF. This would be done via a Steering Committee with members selected by agreement with the stakeholders including the Government of Sindh. It was agreed that the contact person for the Action Plan implementation from the GoS side would be Mr. Muslim Abbasi, Chairman of the Chief Minister’s Investment Cell, GoS.

PROPOSED FOCUS OF THE ACTION PLAN

Principle subject areas

The meeting agreed that the main subject areas for work would be:

Fisheries – Sindh is a major producer of fish from its long coastline. Karachi Fish Harbour (KFH) is managed under the auspices of the GoS but provides the major exit point for exports of fish from the entire country, especially Sindh and Balochistan. The KFH has a range of management and technical problems that have been identified as reducing the competitiveness of the entire national fishery. Exports to the major European market are under threat relating to the standards of hygiene and management at the harbour. Technical experts appointed by CSF have been working on this issue (in the context of a review of all actions needed to be taken for fishery, both coastal and inland) and have made recommendations to CSF for a targeted series of interventions. An Action Plan for the KFH was prepared and discussed on February 07, 2007 with a Working Group established by the GoS that included the Ministry of Fisheries, Agriculture, Livestock, the Karachi Fish Harbour Authority, the Pakistan Fisherman’s Cooperative Society and fish processors. A finalized Action Plan for the KFH will be presented in due course.

Livestock and Dairy Industry – Pakistan is the world’s fifth largest producer of milk but has a very small proportion of value-added dairy products. Sindh accounts for 14% of the total milk supply in Pakistan from a large herd of cattle and buffalo. Sindhi cattle an indigenous breed that offers excellent potential for development. There are various distortions in the structure of supply in Sindh that disrupt the competitiveness of the industry. This includes the presence of a large herd of milk producing buffalo in the peri-urban areas of Karachi (where feed is trucked to them from rural areas – with economic, social and environmental costs) and a long and inefficient marketing chain that leads to the adulteration of milk where the quality is generally poor. CSF can assist with improving this situation in two respects: first, through promoting and developing buffalo feedlots outside Karachi (i.e., in the feed areas) and by funding cooling tanks for the farmers in Sindh.

Horticulture – As mentioned, northern Sindh has a considerable horticulture industry where the main crops are tropical fruit tress (mango, dates, bananas) but where there is potential for increasing the supply of other cash crops such as tomatoes and chili pepper. Fruit crops such as mango can have their export value increased considerably by being cooled soon after harvest. They can be transferred to controlled atmosphere (CA) environments and packaged correctly. CSF can help with the competitiveness aspects of this activity and with developing downstream industrial processing of horticulture crops. For example, chili peppers can be processed into oleo-resins and flavors that have a high market value.

These are all areas of agriculture, agribusiness and food processing where significant gains in efficiency can be made. These can be directed specifically towards export markets. For mango, for example, key markets in Europe, China, Iran, Bangladesh and Malaysia can be enlarged by gaining the correct quality for the excellent varieties found in Sindh.

KEY MODALITIES FOR THE ACTION PLAN

All these areas are receiving significant attention from other major development projects and are already priority areas for the Government of Sindh and the Government of Pakistan. Regarding the Karachi Fish Harbour, the KFH Authority (the management agency for the Sindh Government and the operator of the Harbour) has received assistance from the EU; the Competent Authority (which monitors quality of the exports) has received technical support from the Norwegian Government and UNIDO. In rural Sindh, donor funded projects such as the Sindh Rural Development Project (loan funds from the Asian Development Bank) have tackled rural infrastructure and fundamental issues of land reform and poverty. A number of NGOs are also working in the Province with a specific focus on agricultural and rural development. These include the following that have been selected according to agreed GoS criteria:

Rural Development Society.
Health and Nutrition Development Society.
Indus Resource Centre.
Sindh Agriculture and Forestry Workers Cooperative Society.
National Rural Support Programme.

It is suggested that an effective working modality for the Sindh-CSF Action Plan would be to harness the existing provincial support network of NGOS and projects. The Horticulture Export Development Board, Horticulture Strategic Working Group, Dairy Pakistan and the Livestock and Dairy Development Board should also be mentioned in this regard; these are national initiatives but have activities in Sindh. The role of various types of non-governmental structures such as Rural Support Organizations (RSOs), Community Based Organizations (CBOs) and Community Organizations (COs) would be developed via a community mobilization effort led by the GOS and its various specialized agencies (e.g., such as the Sindh Coastal Development Authority).

As a first step in this program, it is suggested that CSF provide assistance to review current rural development programs (especially those identified in horticulture and dairy/livestock) for their impact on the efficiency of the Sindh economy. This work would be undertaken by local consultants targeted at the key elements of competitiveness mentioned above. These short studies could be undertaken in the space of 3-4 weeks and then the results discussed at a stakeholder workshops to be held in Karachi and Hyderabad (or other agreed locations). These workshops would include the principal stakeholders (i.e., landowners, industrialists, NGOs, and GoS). The short studies and the workshops would then lead to developing the projects to be financed through the matching grant facility of the CSF.

The approach suggested for the Action Plan includes an important cross-cutting issue which is support for greater gender equity as competitiveness is increased. The expected outcomes are:

Enhanced women participation in the rural economy and improved access to productive resources and technical services.
Greater access to health and education services and increased awareness of rights, through development of community infrastructure, registration, awareness education, and release from bonded labor.
Increased acceptance of women’s roles in decision-making and development activities and recognition that these are integral components of poverty alleviation in general.

Appendix: List of Participants

Mr. Nazar Hussain Mahar, Additional Chief Secretary, GoS
Mr. Muslim Abbasi, Chairman Chief Minister Investment Cell, GoS
Mr. Muhammad Ashfaque,
Mr. Murli Munawar,
Mr. Anees Qadir,
Mr. Arthur Bayhan, CEO, CSF
Mr. Muhammad Uzair, CFO, CSF
Mr. Geoffrey J. Quartermaine Bastin, Agriculture, Food and Fisheries Consultant, CSF

Mr. Robert Lindley, Fisheries Consultant, CSF