Independent Evaluation

Social Action Program Project
Project Performance Audit Report

The Social Action Program (SAP), launched in 1992, was an ambitious plan by the Government of Pakistan to significantly increase public expenditure on basic social services, thereby improving the country's poor social indicators. It also aimed to reduce urban-rural and gender disparities. SAP focused on basic education, primary health care, rural water supply and sanitation, and population welfare. Despite impressive economic growth in the 30 years up to 1990, these sectors had been severely neglected.

The first three years of SAP were budgeted to cost $4 billion of which the Government undertook to fund $3 billion. ADB joined the World Bank, the Governments of Netherlands, and the United Kingdom in supporting SAP. ADB approved a loan of $100 million for the Social Action Program Project (SAPP) in 1994 and this was completed in 1997.

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Background to the Social Action Program

Pakistan's gross domestic product (GDP) growth averaged over 6% per year between 1960 and 1990; per capita GDP was the highest in South Asia by the end of the period. However, its social indicators were among the worst in the region. The under-five mortality rate was the highest, infant mortality was the second highest, and the adult literacy rate was the second lowest in South and Southeast Asia by the early 1990s. Pakistan also had at that time one of the worst income disparities in Asia, a literacy level of 35% (10% for rural women), a contraceptive prevalence rate of 12%, and a failed family planning program.

Pakistan allocated only 3% of annual public expenditure to education and health between 1986 and 1992, the lowest in South and Southeast Asia. Within this, two thirds of the education and health budgets at federal and provincial levels were allocated to secondary and tertiary education, hospitals, and other services that primarily benefited higher socioeconomic groups. There was a need to refocus social sector budgets on (i) primary education, primary health care, and basic social services; and (ii) nonsalary recurrent expenditure to improve the functioning of facilities and the quality of services.

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Features of the Social Action Program Project

The multi-donor support for SAP adopted an innovative approach of rewarding incremental Government expenditure on the SAP sectors, with a particular emphasis on non-salary expenditure. Policy reform and intensive dialogue with the Government were also important features of the SAPP. ADB's SAPP formed an integral part of the funding agencies support for SAP. All external funds were jointly used to reimburse a proportion of the operational expenditure of provincial departments and federal ministries delivering SAP services. Reimbursement was on the basis of a proportion of incremental expenditure beyond a target percentage of GDP.

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Performance Evaluation of ADB's Social Action Program Project

OED evaluated the performance of SAPP in 2001. SAPP was assessed as relevant. It was highly relevant in terms of need but its design was somewhat less relevant as it placed too much emphasis on the level of expenditure and not enough on the quality of expenditure and governance issues. Channeling incremental nonsalary expenditure through a largely unchanged and inefficient public service was not sound. The project was assessed as less efficacious, although it was successful in achieving expenditure targets by completion. The performance of the education sector, which received 60% of SAP expenditure, was disappointing. The health sector performed better. Achievements in important crosscutting areas (increased private sector, NGO and community participation, greater decentralization and cost recovery) were also mixed. Bureaucratic resistance to some of the reforms was underestimated. SAPP produced few efficiency gains and so was rated less efficient. Sustainability was rated less likely. An increased political commitment has been sustained but it has not proven possible to maintain increased expenditure, critically that for nonsalary expenditure.

SAPP was rated partly successful. By completion, SAPP had achieved many of its planned outputs but generally these were not sustained. Consequently, the achievements in improved social indicators and reduced disparities were much less than expected. Notwithstanding the partly successful rating, SAPP was a creditable performance within the context of Pakistan.

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Lessons Learned

Important lessons emerging included:

• Directing incremental expenditure through poorly performing and largely unchanged public institutions produces unsatisfactory results.
• Opportunities for efficiency and effectiveness gains from existing expenditures need to be identified before seeking to increase allocations.
• Incremental public expenditure for SAP sectors will only be sustainable if accompanied by strong efforts to increase revenues.
• An increasing proportion of people are willing to pay private providers for basic services. Support for this trend must be incorporated in future projects.

A key issue for the future of social sector development in Pakistan is how to fully incorporate the rapidly growing role of the private sector, and the willingness and ability of increasing numbers of people to pay for higher-quality social services, in the SAP policy and strategy framework. SAPP was an innovative response to a dire situation. Further innovation is needed for a situation that remains dire.

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