Pakistan : National Disaster Risk Management Fund

Finance / Infrastructure finance and investment funds - Insurance and contractual savings

Health / Disease control of communicable disease - Health care finance - Health system development

A more disaster resilient Pakistan with reduced socio-economic and fiscal vulnerability to natural hazards and climate variability and change (National Disaster Management Plan (2013-2022) and Draft National Flood Protection Plan IV (2016-2026)

Increased and sustainable institutional and physical capacity to reduce the socio-economic and fiscal impacts of natural disasters and climate change.

NDRMF established and made operational

Increased investment to reduce vulnerability to disasters.

Analytical work and products to improve fiscal management of disaster risks.

The Project suffered substantial start up delays mainly related to: (i) full appointment of Board of Directors, of the National Disaster Risk Management Fund (NDRMF, or the Fund) a government-owned Section 42 company established under the Project under Company Ordinance 1984, (ii) office establishment and staffing of the NDRMF, and (iii) development of systems and procedures for the NDRMF operations.

However, the progress substantially improved after the mid-term review mission fielded in December 2017, and the Project is now back on track. As of September 2018, the project has achieved cumulative contract award amounting to $96.9 million, and cumulative disbursement of $108.1 million representing 48% and 53% of the net loan and grant amount of $203.4 million.

The overall progress on the three outputs of the project is given below:

Output 1: NDRMF established and made operational

The NDRMF has now been substantially established with an independent board. The focus of this output was to establish a robust quality control and due diligence capacity and system within NDRMF, to ensure the quality of investments in disaster risk reduction. The NDRMF has met the effectiveness and disbursements conditions of the ADB loans and grant. The Government of Pakistan (GOP) has also released its counterpart share of $25 million. The endowment fund of the NDRMF has also been established and funds invested in one year term deposits with the National Bank of Pakistan. . The core staff including, the chief executive, chief financial officer, safeguards team, managers, external auditors and company secretary, have all been hired. The NDRMF board committees for HR, finance, audit, nomination, risk management and procurement has been notified and are functional. The first audited financial statement of the NDRMF (2017) approved by its general body has been received by ADB. The NDRMF audited statement of compliance with corporate governance guidelines has been submitted to ADB and the regulator. All essential policies, guidelines and manual related to finance, audit, procurement, human resource, social protection and safeguard functions of the NDRMF have been developed and approved by NDRMF's board. A limit of authority manual has also been prepared and finalized for approval of the Board in the next BoD meeting. The NDRMF result-based monitoring framework and its enterprise resource planning application are currently being developed. Process of institutional procurement has started.

Output 2: Increased investment to reduce vulnerability to disasters.

A subproject review criterion was developed and an accreditation process to short-list fund implementation partners (FIPs) for project implementation was advertised in August 2018. The accreditation applications of FIPs are currently being evaluated. The accreditation of FIPs and sub-project review and approval that started in August 2018 are the two essential activities to deliver this output.

Output 3: Analytical work and products to improve fiscal management of disaster risks.

This output has three sub-components; (i) disaster risk modeling, (ii) development of disaster risk financing (DRF) strategy, and (iii) development of two DRF instruments, and piloting of one.

The disaster risk modeling is to be conducted by a firm whose terms of reference have been finalized. Due to sensitivity of data to be collected and processed for this purpose, the EA wants this to be single sourced to SPARCO, for which a formal request for ADB's approval is yet to be received from the borrower.

For DRF strategy development, the four individual consultants are yet to be hired who will work under supervision of an international consultant hired by the Swiss Development Corporation for this purpose. The terms of reference of the four individual consultants are being finalized.

A DRF workshop was held in April 2018 attended by major stake holders including the industry players to reach on a consensus on the approach and methodology for development of DRF strategy and instruments, and share each other's knowledge and experience on the subject.

The work on development and piloting of the DRF instruments can only start after completion of the above two sub components.

The project is classified as financial intermediary for the environment, involuntary resettlement, and indigenous peoples. The project will not finance any category A subprojects. No significant adverse environmental impacts are anticipated, as most civil works will involve retrofitting or rehabilitating existing facilities. Negative impacts during construction will likely be short term, site-specific, and mitigable. An ESMS document has been prepared. The project may finance subprojects classified as category B for the environment in line with the requirements set out in the draft ESMS document.

NDRMF will have a Safeguards and Gender Unit (SGU) under the Quality Assurance Group (QAG) to support the conduct of safeguards, social protection, and gender due diligence in the project appraisal, monitoring, and reporting. The Director, QAG will be the ESMS Focal Point for the Fund and consolidate inputs from the SGU technical staff. The SGU will have a core technical team composed of an Environment Officer (EO), a Social Safeguards Officer (SSO), and a Social Development and Gender Officer (SDGO), supported by 3 technical/field-support and 2 administration-support staff.

The project is classified as financial intermediary for the environment, involuntary resettlement, and indigenous peoples. Proposals that involve no or limited involuntary resettlement impacts will be prioritized. An ESMS document has been prepared. The project may finance subprojects classified as category B for the involuntary resettlement in line with the requirements set out in the draft ESMS document.

NDRMF will have a Safeguards and Gender Unit (SGU) under the Quality Assurance Group (QAG) to support the conduct of safeguards, social protection, and gender due diligence in the project appraisal, monitoring, and reporting. The Director, QAG will be the ESMS Focal Point for the Fund and consolidate inputs from the SGU technical staff. The SGU will have a core technical team composed of an Environment Officer (EO), a Social Safeguards Officer (SSO), and a Social Development and Gender Officer (SDGO), supported by 3 technical/field-support and 2 administration-support staff.

The project is classified as financial intermediary for the environment, involuntary resettlement, and indigenous peoples. No impacts on indigenous peoples are anticipated. An ESMS document has been prepared. The project may finance subprojects classified as category B for the indigenous peoples in line with the requirements set out in the draft ESMS document.

NDRMF will have a Safeguards and Gender Unit (SGU) under the Quality Assurance Group (QAG) to support the conduct of safeguards, social protection, and gender due diligence in the project appraisal, monitoring, and reporting. The Director, QAG will be the ESMS Focal Point for the Fund and consolidate inputs from the SGU technical staff. The SGU will have a core technical team composed of an Environment Officer (EO), a Social Safeguards Officer (SSO), and a Social Development and Gender Officer (SDGO), supported by 3 technical/field-support and 2 administration-support staff.

The NDRMF is the implementing agency for this project. It will provide financial and technical support to government and nongovernment partners to implement the NDMP and NFFP-IV. It will assess and prioritize subprojects for which ongranting is requested. The NDRMF will (i) adopt acceptable corporate and financial governance and management practices (e.g., the Code of Corporate Governance, 2012); (ii) have its accounts and financial statements audited annually by independent auditors in a manner acceptable to ADB; (iii) have adequate policies, systems, and procedures to assess and monitor subprojects' economic, social, and environmental impacts (e.g., adopt an environmental and social management system [ESMS], and prepare necessary safeguard documents, where applicable); and (iv) ensure that an economic internal rate of return (EIRR) of at least 12% for works and equipment subprojects is achieved. The NDRMF will also monitor the implementation performance of approved subprojects.

The Economic Affairs Division of the Ministry for Finance, Revenue, Economic Affairs, Statistics and Privatization, which is responsible for donor coordination across all sectors, will be the NDRMF's executing agency. It will ensure the effective coordination of NDRMF and other donor support for DRM through a common mechanism, which will oversee all DRM assistance in the country at the federal level. At the provincial and regional levels, coordination committees led by planning agencies and supported by the NDRMF will facilitate a coordinated approach and collective monitoring and accountability in the implementation of a DRM agenda across the regions. These committees, which will include representation from all key DRM stakeholders, will also provide an ideal platform for deepening DRM mainstreaming work in the provinces