Attachement 4 USAID Pakistan Strategy.pdf

UNCLASSIFIED

Approved for Public Release

Pakistan

COUNTRY DEVELOPMENT

COOPERATION STRATEGY

(CDCS)

ORIGINAL DATES: AUGUST 24, 2018 – AUGUST 24, 2023

AMENDED/UPDATED ON: APRIL 2, 2020

APPROVED FOR PUBLIC RELEASE

Table of Contents

Acronyms/Abbreviations 4

Preamble to the Country Development Cooperation Strategy (CDCS) Amendment 5

I. Executive Summary 6

The Strategy 7

II. Development Context 8

Challenges 9

Opportunities 10

III. Engagement and Coordination with Donors and the Government of Pakistan 11

Coordination with Development Partners 11

Coordination with the Government of Pakistan 11

IV. Development Hypotheses and Results Framework 12

Development Hypothesis 12

Results Framework 13

Development Objective (DO 1): Expanded Writ of Government along the AF/PAK Border

Region 13

Intermediate Result (IR) 1.1: FATA reforms supported 14

IR 1.2: Trust in government enhanced 15

IR 1.3: Economic opportunities increased 16

DO 2: More Peaceful Communities In Key Areas 17

IR 2.1: Key leaders advance social cohesion initiatives 17

DO 3: Increased Private Sector- led Inclusive Economic Growth 19

IR 3.1: Business enabling environment improved 20

IR 3.2: Employment opportunities increased 21

IR 3.3: Sustainable energy supplied to the economy 24

Special Objective (SpO) 1: Strengthened Global Health Security Capacities in Pakistan 25

Special Intermediate Result (SpIR) 1.1 Infectious disease prevention and detection improved 25

SpIR 1.2 Infectious disease response improved 27

Cross-cutting Themes 28

Youth 28

Gender 29

Partnerships 30

V. Monitoring, Evaluation, and Learning 31

Overview 31

Collaboration, Learning, and Adapting 31

Considering Conflict-Sensitivity Principles 31

VI. Annex 33

Annex 1 Journey to Self-reliance Country Roadmap 33

Acronyms/Abbreviations

AF/PAK Afghanistan/Pakistan

CDCS Country Development Cooperation

Strategy

CLA collaborating, learning, and adapting

CPEC China-Pakistan Economic

Corridor

CSO civil society organization

DO Development Objective

FATA Federally Administered Tribal Areas

GDP gross domestic product

GHSA Global Health Security Agenda

GoP Government of Pakistan

GoS Government of Sindh

IMF International Monetary Fund

IP Implementing Partner

IR Intermediate Result

J2SR Journey to Self-reliance

KP Khyber-Pakhtunkhwa

MEL monitoring, evaluation and learning

MTM Multi-Tiered Monitoring

NAP National Action Plan

NGO non-governmental organization

SDG Sustainable Development Goals

SME small and medium-sized enterprises

SpIR Special Intermediate Result

SpO Special Objective

USAID U.S. Agency for International

Development

USG U.S. Government

VE violent extremism

VEO violent extremist organization

Preamble to the Country Development Cooperation Strategy (CDCS)

Amendment

The USAID/Pakistan CDCS FY 2018-2023 was approved on August 24, 2018. On February 28, 2020, the Mission received approval to make the following amendments:

1. Change Development Objective number two (DO 2) from “Strengthened Capacity to

Prevent Violent Extremism in Key Areas” to “More Peaceful Communities in Key Areas,” to align with Pakistan’s Journey to Self-reliance (J2SR).

2. Add Special Objective number one (SpO 1) on Global Health Security: “Strengthened Global

Health Security Capacities in Pakistan” to focus USAID’s implementation of the 2019 United States Global Health Security Strategy1 and the Global Health Security Agenda (GHSA)2, by preventing, detecting, and responding to infectious disease threats in Pakistan.

The Mission also updated the CDCS narrative to reflect new U.S. Government (USG) and Agency policies.3 These updates include:

● Revising the “Development Context” section to reflect major developments in Pakistan’s macroeconomic conditions since August 2018.

● Updating the “Development Hypothesis” and “Development Objective 2” sections to align with the proposed changes to DO 2 and the addition of the SpO 1.

This CDCS was amended in early 2020 as COVID-19 became a global pandemic. The Mission will continue to monitor its potential impact.

1 United States Government Global Health Security Strategy. 2019. Internet: https://www.whitehouse.gov/wp-content/uploads/2019/05/GHSS.pdf 2 Global Health Security Agenda. Internet: https://ghsagenda.org/ 3 Per ADS 201, CDCSs are “living documents,” and Missions should regularly revisit them to assess progress, capture lessons learned, and make adjustments, as necessary. ADS 201 also outlines the requirements for updating and amending existing CDCSs. Changes at the DO-level constitute an amendment and require approval by a Mission’s Regional Bureau AA. Changes at the Intermediate Result (IR) or below do not require clearance or approval from a Regional Bureau. However, Missions must advise PPL and the Regional Bureau of any update.

https://www.whitehouse.gov/wp-content/uploads/2019/05/GHSS.pdf https://www.whitehouse.gov/wp-content/uploads/2019/05/GHSS.pdf https://ghsagenda.org/

I. Executive Summary The United States Agency for International Development (USAID) works in concert with the U.S.

Department of State on behalf of the American people to “promote and demonstrate democratic values abroad, and advance a free, peaceful, and prosperous world.”4 This Country

Development Cooperation Strategy (CDCS) defines USAID’s development assistance priorities for the Islamic Republic of Pakistan for five years (2018-2023) and directly supports the

President’s South Asia Strategy. The CDCS advances U.S. interests through focused development approaches that meet Pakistan’s most pressing needs of greater security, economic growth, and improved governance. Its strategic focus on regional partners facilitates greater cross-border (Afghanistan-Pakistan) trade. In terms of specific U.S. economic interests, the CDCS seeks to improve the business enabling environment to encourage private sector investment, appeal to more U.S. businesses to operate in Pakistan and attract U.S. products and services to this growing market.

Pakistan’s government inherited the country’s adverse macroeconomic situation, which includes $9 billion of circular debt5 in the energy sector and significant foreign debt, due in large part to Chinese investment. To support Pakistan’s macroeconomic recovery, in July 2019, the

International Monetary Fund (IMF) approved a $6 billion extended fund facility for 39 months.

Over the next three years, Pakistan is committed to a package of reforms to expand the tax base and increase competitiveness.

Despite these challenges, Pakistan’s economy continues to grow. Foreign exchange inflows increased during 2017-18, and strong performance for some exports led to recovery from previously declining trends.6 Pakistan's economic growth is still, however, largely driven by domestic consumption rather than by regional and international trade and the country struggles to competitively export goods and services.

This CDCS is anchored in USAID’s new orientation towards the concept of self-reliance, that is, ensuring USAID’s support to a country helps build its capacity to manage its own development journey, the Agency framework of Journey to Self Reliance (J2SR), and its ability to plan, finance, and implement solutions to solve its own development challenges. Understanding

4 U.S. Department of State and the U.S. Agency for International Development, The Joint Strategic Plan, FY 2018 - 2022, February 2018, p. 19.

5 Circular debt as officially defined by the Economic Coordination Committee (ECC) of the Pakistan Cabinet in 2014 is the amount of cash shortfall within the Central Power Purchasing Agency, which it cannot pay to power supply companies.

6 Dr. M. Amanullah and Muhammad Usman Khan, “Growth momentum and imbalances in Pakistan’s economy,” The Express Tribune, April 9, 2018, online edition, Business section. Retrieved from: https://tribune.com.pk/story/1680853/2-growth-momentum-imbalances-pakistans-economy/ where a country’s self-reliance strengths and challenges are allows USAID to orient its relationship and assistance accordingly. J2SR is based on two mutually-reinforcing factors:

commitment and capacity. Commitment refers to the degree to which a country’s laws, policies, actions, and informal governance mechanisms support progress towards self-reliance.

Capacity measures how far a country has come in its journey across the dimensions of political, social, and economic development, including the ability to work across these sectors. Increases in commitment and capacity should mean an increase in self-reliance. Key indicators are measured through a country roadmap to self-reliance.

The CDCS charts a forward-looking path that works to strengthen self-reliance, by supporting the United States and Pakistan’s shared development goals and sustaining this important strategic relationship in South Asia. The CDCS promotes greater private-sector engagement in development and more strategic efforts to harness the energy and aspirations of a growing youth population and marginalized communities. These steps will help Pakistan realize its enormous regional and international potential. As USAID/Pakistan’s development strategy delves into U.S. national security interests--elevating efforts in preventing violent extremism

(VE), and ensuring the safety of the U.S. homeland, as well as for Pakistan citizens. As the tribal areas within the Afghanistan/Pakistan border were once a major hub for terrorist groups--and is just recovering from military action in addressing these issues--it is important that Pakistan maintain gains from these campaigns--ensuring VE groups do not come back into the area, while also providing support to the population. In addition to the tribal areas, intolerance is on the rise in Pakistan. This fact feeds into overall VE messaging. It is critical that USAID work to change the overall VE rhetoric in Pakistan and aid in addressing critical grievances which feed into the overall VE agenda.

The Strategy

USAID/Pakistan’s CDCS will guide the use of USAID-managed foreign assistance resources to achieve a more stable, peaceful, and prosperous Pakistan. To reach this goal, USAID/Pakistan aims to achieve the following objectives:

1. Expanded writ7 of government along the Afghanistan/Pakistan (AF/PAK) border region

2. More peaceful communities in key areas

3. Increased private-sector led inclusive economic growth

4. Strengthened global health security capacities in Pakistan

7 Writ of government refers not only to the physical or spatial presence of State through law enforcement personnel in all geographical areas but also in the ability to ensure compliance with the constitution and laws of the land. The essential requirement of communal living means that personal security, dispute adjudication and conflict resolution remain the primary obligations of the State. In addition, the obligatory and smooth provision of socio-economic services in the health and education sectors and the human rights guarantees are also State responsibility.

II. Development Context

Pakistan has a population of nearly 208 million people,8 making it the world’s 5th most populous country and the second-largest Muslim nation. Pakistan plays an important, and at times paradoxical, role in the region’s security and economy, as it is a nuclear-armed state, a member of the Non-Aligned Movement, and geographically links China, Afghanistan, and the

Central Asian Republics with the Arabian Sea.

Recently, Pakistan has experienced a sharp deterioration in its macroeconomic and growth outlook. To support recovery, in July 2019, the IMF approved a $6 billion extended fund facility for 39 months. Over the next three years, Pakistan is committed to a package of reforms to expand the tax base and increase competitiveness. The USG supports this reform package, which is aligned with our assistance program.

The CDCS holds that a more stable, peaceful, and prosperous Pakistan, in which women participate fully in civic and economic life, protects U.S. national security and furthers American interests. USAID will work with key Government of Pakistan (GoP) interlocutors, primarily at the provincial and community levels, to address the root causes of instability and VE in Pakistan.

Most prominent, activities will engage the Khyber-Pakhtunkhwa (KP) government, including the vestiges of the Federally Administered Tribal Areas (FATA) Secretariat and offices of newly merged entities9, along with other contiguous provincial to local authorities in the AF/PAK border region, to improve governance, social services, and livelihoods. In a supporting effort, interventions will include work with district- and community-level authorities in vulnerable areas of Southern Punjab, Northern Sindh, and Karachi to help the GoP strengthen its legitimacy, respond evenly to grievances, and set the foundations for enduring prosperity by spurring economic growth.

8 Pakistan Bureau of Statistics, 2017, Provisional Summary Results of 6th Population and Housing Census, 2017, http://www.pbs.gov.pk/content/provisional-summary-results-6th-population-and-housing-census-2017-0 9 FATA is now officially referred to as the Newly Merged Districts (NMD) as of August 2018, simultaneous with CDCS approval.

FATA, in this document, refers to the NMDs of Khyber-Pakhtunkhwa.

Challenges

Pakistan faces a number of development challenges, including instability and a lack of gender equality. As a result of its insecurity, Pakistan remains a non-permissive operating environment for USG institutions. And, its unpredictable security situation continues to prevent the free movement of U.S. personnel for official purposes. Restrictive GoP protocols further hinder travel and constrain USAID implementing partner (IP) activities in key areas.

Pakistan is rated 143/144 countries for gender equality measures,10 due to persistent and pervasive restrictions on the agency of women and girls. The high prevalence of gender-based violence, limited enforcement of laws that provide for equal rights and protections, and limited access to social and economic resources prolong their neglect and marginalization. Rapid population growth, accentuated by a youth bulge, is straining the country’s scarce resources.

Climate change and declining biodiversity, forest cover, and ecosystem health are also negatively impacting development in Pakistan. Pakistan ranks 6th in the world in vulnerability to the effects of climate change and is experiencing rising temperatures faster than global averages. Since the 1990s, changing rainfall patterns have led to recurrent heat waves, floods, 10 The World Economic Forum, Global Gender Gap Report, 2017. Pakistan ranks 143/144 countries for gender gap measures.

and persistent droughts.11 These conditions have already resulted in poor health outcomes, decreased agricultural productivity, and lower economic growth.

Opportunities

The 2018 national elections held promise of new key actors in government. This strategy is positioned to take advantage of this and several other opportunities to contribute to a more stable and developed Pakistan. USAID activities will seek to build institutional capacity, encourage greater civic engagement, and develop public-private partnerships for improved and sustainable livelihoods.

There is also a historical and monumental opportunity for USAID to support the GoP decision to integrate the KP’s newly merged districts into Pakistan’s governance system. Pakistan’s growing youth population, which is increasingly connected and aware, looms as a powerful force multiplier for change.12 USAID will support the GoP in devising forward-looking, targeted policies to engage youth in positive social, economic, and civic pursuits. Through its education, health, governance, and economic development activities, USAID will prepare and encourage youth to think critically, participate responsibly in the country’s continued democratic transition, and bring vitality to the Pakistani market place with new skills and ideas.

USAID initiatives will seek to improve Pakistan’s competitiveness for foreign investment and increase levels of cross-border (AF/PAK) and other international trade. Through greater inclusion of non-traditional development partners (i.e., the Pakistani diaspora), the CDCS will emphasize public-private partnerships to spur innovation, create jobs, and capitalize on

Pakistan’s growing consumer base for U.S. products.

The GoP’s National Action Plan (NAP)13 highlights the government’s commitment to enhance peace and security by countering extremism, implementing administrative and development reforms in KP’s newly merged districts, and addressing the concerns of disaffected, at-risk communities. This has provided space for interventions under the GoP’s Vision 2025,14 which articulates the government’s commitment to long-term development.

11 USAID Global Environmental Management Support Project (GEMS II)/Cadmus Group, 2017 Pakistan Tropic Forest and Biodiversity (FAA 118/119), Climate Change, and Ecosystem Services Assessment, October, 2017, p. 57.

https://pdf.usaid.gov/pdf_docs/PA00SWTP.pdf 12 Dominykas Broga, “Youth bulge or bomb? Harnessing the potential of Pakistani youth,” [online blog] London School of Economics and Political Science, April 28, 2016. http://blogs.lse.ac.uk/southasia/2016/05/13/youth-bulge-or-bomb-harnessing-the-potential-of-pakistani-youth/ 13 Government of Pakistan, Ministry of Interior/National Counter Terrorism Authority, National Action Plan, 2014 https://nacta.gov.pk/nap-2014/ 14 Government of Pakistan, Ministry of Planning, Development & Reform/Planning Commission/Pakistan Vision 2025 Secretariat, “Executive Summary,” Vision 2025, 2014 http://pc.gov.pk/uploads/vision2025/Vision-2025-Executive-Summary.pdf https://pdf.usaid.gov/pdf_docs/PA00SWTP.pdf http://blogs.lse.ac.uk/southasia/2016/05/13/youth-bulge-or-bomb-harnessing-the-potential-of-pakistani-youth/ http://blogs.lse.ac.uk/southasia/2016/05/13/youth-bulge-or-bomb-harnessing-the-potential-of-pakistani-youth/ https://nacta.gov.pk/nap-2014/ http://pc.gov.pk/uploads/vision2025/Vision-2025-Executive-Summary.pdf http://pc.gov.pk/uploads/vision2025/Vision-2025-Executive-Summary.pdf

Pakistan has also prioritized the United Nations’ Sustainable Development Goals (SDG) and was the first country to adopt the SDG 2030 agenda through a unanimous resolution of Parliament.

The GoP has fully aligned the seven pillars of Vision 2025 with the SDGs, providing a comprehensive long-term strategy for achieving inclusive growth and sustainable development.15 At the federal level, an SDG Monitoring and Coordination Unit, in coordination with the United Nations Development Program, has been set up to serve as a national coordinating entity with similar units established in the provinces. The CDCS aligns and complements Pakistan’s Vision 2025.

III. Engagement and Coordination with Donors and the Government of Pakistan

Coordination with Development Partners

USAID/Pakistan’s proposed thematic and geographic focus complements host-government and other donors’ existing strategies and fills critical donor gaps. To ensure this complementarity, Mission technical offices routinely consult with other donors during project design and implementation. These consultations have focused largely on building synergies and potential collaboration in the CDCS geographic focus areas.

Between October 2017 and March 2018, USAID facilitated a series of meetings between the

Government of Sindh (GoS), donors, nongovernmental organizations (NGO), and business leaders to coordinate donor assistance and align it with government priorities. These discussions culminated in a one-day Sindh Development Forum at which the USG secured broad donor commitment to coordinate assistance, incorporated private sector priorities and helped the GoS clarify and prioritize its development goals. The Forum prompted the adoption of the new Sindh Agriculture Policy and the establishment of an Agriculture Commission.

Coordination with the Government of Pakistan The Mission has shared and collaborated on key priorities of this strategy with interlocutors at

Pakistan’s Economic Affairs Division in the Ministry of Finance. In April 2018, senior USG and

Mission officials met with the Ministers of the Interior and of Planning and Development to discuss the proposed strategy. The GoP endorsed the draft strategy and provided specific suggestions, including a focus on the Small and Medium Enterprise Activity’s education and vocational skills training. The Mission will continue to seek opportunities to formally consult

GoP partners at the national and subnational levels as the CDCS is finalized.

15 Government of Pakistan, Ministry of Planning Development & Reform, “Overview of Sustainable Development Goals” http://pc.gov.pk/web/sdg/sdgpak

IV. Development Hypotheses and Results Framework

Development Hypothesis

USAID/Pakistan’s theory of change holds that if confidence in government institutions in Pakistan increases, along with tolerance and the ability of communities to resist extremist influences, and the economy continues to grow, then Pakistan will become more stable. This underpins

USAID’s decision to focus its work on marginalized and volatile areas along the

AF/PAK border region, especially, but not exclusively, the newly merged districts of KP province, Southern Punjab, Northern Sindh, and Karachi, because these areas are prone to extremism and where governance needs to be strengthened. This also moors the strategy firmly in building

Pakistan’s self-reliance.

Results Framework

Development Objective (DO 1): Expanded Writ of Government along the

AF/PAK Border Region

The AF/PAK border region has a history of disenfranchisement, corruption, poverty, injustice, underdevelopment, and a lack of basic services.16 The region has also historically been the epicenter of operations for some of the world’s most active, Violent Extremist

Organizations (VEO) resulting in population displacement and greater vulnerability, particularly for young men and women.

Women lack the opportunity to participate in civic discourse or voice their concerns and are underrepresented across all levels of government. As such, emphasis will be placed on ensuring women’s safe access to gender-sensitive services. A focus on civic engagement will strengthen the legitimacy and writ of the government by improving the confidence and trust of local communities and preventing the continued exploitation of tribal systems by violent extremists.

16 Imtiaz Ali, Special Report: Mainstreaming Pakistan’s Federally Administered Tribal Areas Reform - Initiatives and Roadblocks, Washington, DC: United States Institute for Peace, March 2018 https://www.usip.org/sites/default/files/2018-03/sr-421-mainstreaming-pakistan-federally-administered-tribal-areas.pdf

"Pakistan's tribal areas are not only key to the country's peace and stability, they are also vital to US interests in the region and, more broadly, the interests of other regional powers."

https://www.usip.org/sites/default/files/2018-03/sr-421-mainstreaming-pakistan-federally-administered-tribal-areas.pdf https://www.usip.org/sites/default/files/2018-03/sr-421-mainstreaming-pakistan-federally-administered-tribal-areas.pdf

The theory of change for the AF/PAK border region is that if reforms are implemented that enable the government to provide basic services, protect the rights of its constituents— particularly women and minority groups—and facilitate economic opportunities, then stability in the region will increase.

Intermediate Result (IR) 1.1: FATA reforms supported

Proposed FATA reforms include the extension of Pakistani laws to the newly merged districts of

KP province and the establishment of a judicial system, as envisaged under the Constitution.17

To support the enabling environment for these proposed GoP-led reforms in KP’s newly merged districts, USAID will follow the government’s lead and provide technical support to reconcile the legal framework of these areas with Pakistan’s constitutional framework; facilitate citizen-driven consensus that involves youth, men, and women from diverse communities; implement policy and procedural changes, including upholding men and women’s land rights; and promote collateral-based lending, which will reinforce economic activity and partnerships in KP’s newly merged districts.

Sub-IR 1.1.1: Establishment of government institutions supported

USAID will support establishing inclusive and representative administrative and regulatory frameworks that can deliver improved and responsive services to all citizens; it will also help enable a more balanced gender representation and power dynamic in government.

Sub-IR 1.1.2: GoP and FATA systems integrated

Because this legislation is relatively new, introducing GoP systems in KP’s newly merged districts will require developing and integrating the federal government’s overall policy and procedural systems in the new administrative set-up of these affected areas as they evolve.

USAID will help establish such governance structures in KP’s newly merged districts as well as help ensure broader awareness, ownership, and support for the reforms.

Sub-IR 1.1.3: Capacity to implement reforms strengthened

There will be a critical need to provide ongoing policy support and advisory services to the bodies tasked with implementation of FATA reforms. USAID support will include planning, budgeting, and comprehensive gap analysis of capacities of the government institutions of KP’s newly merged districts, including district/agency-level services and facilities, and intergovernmental coordination.

17 In April 2018, Pakistan’s President signed a bill into law extending the Supreme Court and Peshawar High Court jurisdiction to FATA. This legislation represents the most substantial change to governance in FATA in Pakistan’s history and is a promising sign of momentum to implement broader reforms.

IR 1.2: Trust in government enhanced

In a context of vulnerability and insecurity, there is a fundamental lack of trust in the capacity of existing government institutions to equitably and effectively deliver services to address the needs of the population, especially youth and other marginalized groups. Changing this situation is expected to advance development and mitigate the regressive conditions that foster VE.18,19 CDCS implementation will focus on increasing government capacity to deliver accessible, quality services in target areas—including through improved implementation of policies and laws. USAID will work with the GoP to improve public financial management, auditing, procurement, human resource policies, and policy development in a number of sectors (e.g., education, health, water and sanitation, climate, environment, agriculture, and livestock). Training and technical assistance in the education and health sectors will improve local governance capacity, which will lead to improved service delivery, and increased trust in the government.

Sub-IR 1.2.1: Access to basic services increased

The people of KP’s newly merged districts have scant access to basic services, such as health and education, due to the inadequate number of fully functioning service delivery institutions and cultural barriers to access. USAID activities will work to address these shortfalls with technical assistance to strengthen human resources, improve facilities, and increase the government’s ability to deliver education, health, water, and municipal services, with a focus on gender integration.

Sub-IR 1.2.2: Service quality improved

In addition to addressing access challenges, USAID will support activities that enhance the capacity of the government to provide quality services. USAID will provide support for the renovation, construction, repair, and improvement of education, health, and water and sanitation facilities and services.

Sub-IR 1.2.3: Civic engagement increased

Civic engagement, particularly among women and marginalized groups, increases trust between citizens and the local government; and allows citizens to hold their government accountable.20 As FATA reforms move forward, USAID will support activities that promote

18 USAID/Pakistan, Pakistan Fragility Assessment Literature Review, July 2017, p. 65. “The pervasive underdevelopment of the region due to persistent neglect and failure of successive governments to either introduce meaningful reforms or undertake substantial developmental efforts has created a trust deficit between the residents of FATA and the State.”

19 USAID, The Development Response to Violent Extremism and Insurgency Policy, September, 2011.

20 Richard Mallett et al, Surveying Livelihoods, Service Delivery and Governance: Baseline Evidence from the Democratic Republic of Congo, Nepal, Pakistan, Sri Lanka and Uganda, Working Paper 31, London: Overseas Development Institute (ODI), April 14, 2015 https://securelivelihoods.org/publication/nepal-lcp/ https://securelivelihoods.org/publication/nepal-lcp/ frequent dialogue and consultations between the communities of KP’s newly merged districts and their local government representatives. USAID will support interventions to increase awareness of citizens’ rights and responsibilities, and to build the capacity of Pakistani civil society organizations to promote the civic engagement of women and marginalized groups.

IR 1.3: Economic opportunities increased

Many people in KP’s newly merged districts live in abject poverty, take jobs outside the region, participate in illicit enterprises, or join extremist groups. Over 90 percent of the population live in rural areas.21 Subsistence agriculture is the primary source of income. The economy is mostly informal, and military counterterrorism operations have destroyed roads and small infrastructure utilities. The unique situation of KP’s newly merged districts warrants special emphasis needed for economic advancement that emerges beyond the more broadly focused elements of DO 3.

USAID will work with Pakistan to rehabilitate and increase productivity in the agriculture and livestock sectors for both subsistence and commercial farmers. Other interventions will promote micro and small enterprises, forge partnerships with the private sector, promote trade linkages, prioritize job creation and skills development, and support new business associations.

USAID will design targeted interventions to engage women fully in higher agricultural value chain opportunities and non-agricultural work opportunities. USAID will also assist in repairing damaged roads and infrastructure to improve connectivity and market access in remote areas.

Sub-IR 1.3.1: Entrepreneurial capacity enhanced

Activities will cultivate entrepreneurship through area-specific activities to motivate and enable citizens to generate income through self-employment and business ownership. The focus will include vocational training; motivating youth to take strategic entrepreneurial risks and innovate. USAID will engage in programs that promote access to finance and developing value chains and market linkages for small and medium-sized enterprises (SME).

Sub-IR 1.3.2: Agriculture sector improved

Assistance activities will focus on sustainable livelihoods and transitions from subsistence to commercial agriculture; improved livestock production; and water use efficiency and conservation. Agricultural inputs will include training in best practices, processing, and value addition. USAID will also support programs that link and explore public-private agricultural partnerships, high-value horticulture, and market linkages, with a focus on climate-smart, sustainable agricultural practices.

21 Government of Pakistan, Pakistan Bureau of Statistics, Provisional Summary Results of 6th Population and Housing Census, Sub-IR 1.3.3: Connectedness of remote areas increased

The development of infrastructure is crucial to spur economic growth and opportunities for citizens. USAID will support activities that construct and rehabilitate small roads to link remote areas to markets and services to the regional and national economy and provide electricity to underserved areas. USAID will also support activities that promote increased access to information, such as agricultural market prices and socioeconomic policy issues. Infrastructure activities will be environmentally compliant and climate-resilient to ensure all-weather, year-round access to these remote areas.

DO 2: More Peaceful Communities In Key Areas

The persistent presence of VEOs in Pakistan risks backsliding on democratic governance gains, undermines development goals, and squanders USG resources invested in Pakistan over the past several decades.

USAID/Pakistan’s development approach will focus on coexistence, building trust and a shared vision for a common future among communities in key geographic areas. USAID will apply evidence-based practices to support local-led interventions that aim to promote peaceful communities, defined as: communities that have a “harmonious coexistence;”22 this harmony, which exists between individuals, groups and institutions, is characterized by “high levels of trust, a shared vision for a common future, and responsive and legitimate governance institutions, which actively support inclusive economic development.”23 To achieve this end state, USAID/Pakistan will seek to achieve two intermediate results (IR) 1: Key leaders advance social cohesion initiatives, and IR 2: Social tolerance bolstered.

IR 2.1: Key leaders advance social cohesion initiatives

This IR will develop and strengthen institutional and informal leadership at the local level and deepen their collaboration with communities in their respective efforts to address social cohesion challenges. The activities will primarily focus on the local religious leaders, elected representatives, civil society leaders, and government officials. The support will enable local actors to advance initiatives that address identity-based grievances, foster a sense of belonging and agency among community members, build trust, and strengthen coordination between local leadership and communities. The theory of change holds that if key leaders have the knowledge, skills, and abilities to address grievances, and are committed to taking action in

22 Center for Sustainable Peace and Democratic Development: https://www.seedsofpeace.eu/what-we-do/social-cohesion-and-reconciliation/ 23 Ibid. Center for Sustainable Peace and Democratic Development: https://www.seedsofpeace.eu/what-we-do/social-cohesion-and-reconciliation/ collaboration with their communities, then they will be able to more successfully advance initiatives that promote social cohesion.

Interventions in this IR will build the capacity and commitment to prevent sectarian and tribal conflict; support peacebuilding initiatives and counter hate speech; and promote diversity and inclusion. The outcomes include: an increase in the number of actions taken by targeted key leaders to prevent sectarian, religious and tribal divisions; collaborative networks among leaders created or strengthened, collaborative networks between leaders and communities strengthened; and, an increase in legislative oversight of relevant laws.

Sub-IR 2.1.1: Capacity of key leaders to advance social cohesion enhanced

Cultivating the capacity and effectiveness of key leaders who are influential in their communities is essential to promoting a more peaceful and socially cohesive Pakistani society.

Leaders who are aware of the risks to extremist exploitation, and have the knowledge, skills, and abilities to proactively and collaboratively address these risk factors, can reduce the likelihood that extremists will gain influence in their communities. Interventions under this Sub-

IR will identify and empower influential leaders with the knowledge, skills, and abilities necessary to advance initiatives that increase harmonious coexistence, trust between groups, and a shared vision for the future.

Sub-IR 2.1.2: Commitment of key leaders to take action increased

Theories of behavior change regularly cite the need for internal and external incentives to create and sustain behavior change.24 It is important to create external incentives and internal motivation for leaders to implement social cohesion initiatives in Pakistan. USAID will increase the commitment of influential leaders to prioritize social cohesion initiatives by supporting experiential learning and networking opportunities. Activities under this sub-IR will provide opportunities for key leaders to increase their skills and ability to carry out social cohesion initiatives. At the same time, they will create peer networks and provide platforms to share lessons learned and collaborate on local initiatives.

IR 2.2: Social tolerance bolstered

Peaceful societies respect and protect the rights of marginalized groups and foster open participation and discussion to include a multitude of groups in resolving social concerns. This

IR seeks to change the attitudes, perceptions, and behaviors of the wider population towards other identity groups in targeted areas. The theory of change holds that if communities have

24 National Institutes of Health, “Social and Behavioral Theories,” accessed 13 March 2020, https://obssr.od.nih.gov/wp-content/uploads/2016/05/Social-and-Behavioral-Theories.pdf; CDA, “Reflecting on Peace Practice Basics: A Resource Manual,” Collaborative Learning Projects, 2016.

https://obssr.od.nih.gov/wp-content/uploads/2016/05/Social-and-Behavioral-Theories.pdf https://obssr.od.nih.gov/wp-content/uploads/2016/05/Social-and-Behavioral-Theories.pdf https://obssr.od.nih.gov/wp-content/uploads/2016/05/Social-and-Behavioral-Theories.pdf opportunities to cooperate, achieve common goals, and break down false narratives and stereotypes of all groups, then they will be more tolerant and inclusive. USAID will partner with relevant civil society and government stakeholders to increase social tolerance among the wider population by creating opportunities for groups to interact, and address issues through collective means. Interventions in this IR will strengthen dialogue and interaction among diverse groups to promote social and religious tolerance.

Sub-IR 2.2.1: Community-based structures established

Few formal or informal community-based mechanisms exist to address grievances at the local level in USAID’s target areas of South Punjab, Northern Sindh, Karachi, and in KP’s newly merged districts. This Sub-IR seeks to establish community-based structures that enable diverse groups to interact, peacefully resolve conflict, and cooperate to address contentious issues in targeted areas, all of which will increase social tolerance and acceptance of diversity in communities. Interventions will support efforts to strengthen local dispute resolution mechanisms and reorient them to meaningful inclusion of historically marginalized groups in policy- and issues-based discussions in communities. 25

Sub-IR 2.2.2: Multi-stakeholder networks strengthened

There are a number of Pakistani civil society organizations (CSOs) serving many different causes. Nurturing and supporting these types of groups will enable Pakistani civil society to effectively engage government interlocutors to increase demand for good governance and create incentives for the government to address public grievances. This Sub-IR seeks to develop and strengthen the interaction and cooperation between networks of tolerance-oriented, like-minded individuals, groups, and structures across geographies and between different levels of society to identify and address VE issues.

DO 3: Increased Private Sector- led Inclusive Economic Growth

Marginalization, gender-based discrimination, limited access to productive livelihoods, and a dearth of high-quality, relevant education that prepares students to join the licit economy are among the many drivers of extremism and instability in Pakistan.26 In response, USAID will invest in activities that address Pakistan’s youth bulge, help foster a conducive environment for

25 Marginalized groups include religious and ethnic minorities, women, youth, and socially and economically marginalized groups.

26 Executive Board of the United Nations Development Programme, the United Nations Population Fund and the United Nations Office for Project Services, Final common country programme document for Pakistan and the UNFPA results and resources framework, 2013-2017, October 18, 2012 pp.2-7 https://www.unfpa.org/sites/default/files/portal-document/Final%20Country%20Programme%20Document%20for%20Pakistan%20and%20Resource%20Framework.pdf https://www.unfpa.org/sites/default/files/portal-document/Final%20Country%20Programme%20Document%20for%20Pakistan%20and%20Resource%20Framework.pdf https://www.unfpa.org/sites/default/files/portal-document/Final%20Country%20Programme%20Document%20for%20Pakistan%20and%20Resource%20Framework.pdf private-sector growth, investment, and trade, particularly for U.S. businesses and the Pakistani diaspora. A continued focus of increasing access to a reliable and affordable supply of energy to fuel economic growth will remain integral to USAID’s development efforts. In addition, USAID will encourage GoP reform initiatives to foster private-sector led growth and domestic resource mobilization for development. USAID will also take advantage of opportunities that arise throughout Pakistan, with the expectation that the multiplier effects of increased growth will reverberate broadly into targeted geographic areas. Success in this initiative requires increased women’s access to finance, jobs, and education, in line with the GoP’s Vision 2025.27

The theory of change is that if USAID invests in programs to improve the investment climate and promote regional trade, it increases the capacity and opportunities for the workforce to productively engage and it facilitates reforms in the energy sector, and then jobs will be created, and incomes increased leading to the growth of Pakistan’s economy. In turn, improved economic well-being will counter feelings of marginalization and economic frustration among segments of the population, which could reduce their susceptibility to extremism.28

IR 3.1: Business enabling environment improved

Pakistan lags far behind other global players in its private sector competitiveness.29 Export commodities and markets are highly concentrated. Highly restrictive trade policies erode competitiveness. Support for business-friendly reforms will expand access to networks, markets, capital, knowledge, and technology and reduce barriers to greater participation by women, moving them out of the informal sector. Market-oriented reforms can open the door to more investment, greater U.S. business interests, a more diversified export base, and robust economic growth.

Technical assistance, analysis, and public/private-sector dialogue can improve the policy environment, enabling businesses to better access financing, including equity investment.

Initiatives to create sector-specific public-private partnerships will facilitate trade agreements and customs reform, thereby contributing to regional integration.

27 UN Women, Women’s Economic Participation and Empowerment Status Report 2016, May 2016.

http://www2.unwomen.org/-/media/field%20office%20eseasia/docs/publications/2016/05/pk-wee-status-report-lowres.pdf?la=en&vs=5731 28 Shahrbanou Tadjbakhsh, PhD, Fostering Community Resilience for Preventing and Responding to Violent Extremism, [Background Paper] Framing Development Solutions for The Prevention of Violent Extremism Conference. Dushanbe, May, 2016. p. 14 http://www.eurasia.undp.org/content/dam/rbec/docs/Background%20Papers%20on%20Violent%20Extremism%20and%20Its %20Prevention.pdf 29 Klaus Schwab (Ed), Global Competitiveness Report, 2017-2018, World Economic Forum, 2017. The Report ranks Pakistan 122 out of 138 countries and the World Bank’s “Doing Business Report” (see footnote 24, p. 16) ranks Pakistan 147 of 190 countries;

including paying taxes (172), trading across borders (171), getting electricity (167), enforcing contracts (156) and registering property (170) http://www.eurasia.undp.org/content/dam/rbec/docs/Background%20Papers%20on%20Violent%20Extremism%20and%20Its%20Prevention.pdf http://www.eurasia.undp.org/content/dam/rbec/docs/Background%20Papers%20on%20Violent%20Extremism%20and%20Its%20Prevention.pdf

Sub-IR 3.1.1: Policies, regulations, laws, and institutions improved

Program efforts in these areas are intended to level the playing field for U.S. and other foreign businesses by targeting legal and regulatory barriers to greater investments and lower costs.

USAID will support policies to optimize SME development, agriculture, and employment creation. It will work with the GoP and private sector to improve business practices, build networks/linkages, inform policy, and increase access to capital, especially for women entrepreneurs.

Sub-IR 3.1.2: Financial access increased

To address inhibited financial inclusion and marginalized populations, USAID will provide technical assistance to develop loan products for women, youth, and targeted SME sectors;

increase access to new markets, and improve value-chain financing, especially in the agriculture sector. USAID will also provide business development services to improve documentation, creditworthiness, and operational performance of SMEs.

Sub-IR 3.1.3: Regional integration improved

USAID interventions can improve the conditions for cross-border trade and transit by simplifying and harmonizing border clearance and related customs procedures. USAID will likely support the Federal Board of Revenue/Customs in automating processes of regional interest such as: The National Single Window, International Road Transport Convention and Authorized

Economic Operators program. USAID will provide technical assistance to the GoP to improve policy, legal, and regulatory frameworks. USAID will also support the private sector to identify and capitalize on business opportunities in regional markets, including with Afghanistan.

IR 3.2: Employment opportunities increased According to the GoP 2017 Housing and Populations census, Pakistan’s population growth rate is among the highest in the world, signaling the need for job growth. To this end, USAID will put equal weight on the provision of quality health services, improved diet and nutrition, basic literacy and numeracy training, and targeted skills development—focusing on distressed populations to meet this challenge. With 60 percent of the population under the age of 30, investing in health, educational, and agricultural institutions will help young people find employment at higher skill levels. Projects funded under this CDCS will include concerted efforts to address social norms that limit the ability of youth to enter the job market or create businesses.30

30 Iffat Idris with Ayat Abdelaziz, Women and Countering Violent Extremism, Governance and Social Development Research Centre, May 4, 2017, http://www.gsdrc.org/wp-content/uploads/2017/05/HDR_1408.pdf http://www.gsdrc.org/wp-content/uploads/2017/05/HDR_1408.pdf

Activities will focus on increasing job opportunities by promoting private-sector SME partnerships to improve agricultural value chains, focusing on opportunities for less vulnerable and more remunerative work for women. Entrepreneurship will be fostered through networks, including USG program alumni, business incubation centers, universities, mentoring, business planning support, and access to finance. For sustained workforce participation, USAID will emphasize improved regimens of health, nutrition, and education services. USAID will continue to encourage Pakistan to leverage increased domestic resources and will prioritize engaging youth and other marginalized populations.

Sub-IR 3.2.1: Workforce capacity developed

Since over 44 percent of Pakistan’s children under age five are stunted,31 their learning and productivity are adversely affected, leading to corresponding economic losses estimated at 3 percent of GDP. In response, activities will include improving awareness of, availability, and access to nutritious and protein-rich foods for marginalized groups. In addition, USAID will work to strengthen individual and institutional maternal, newborn and child health and family planning health capacity in the public and private sectors, resulting in a healthier workforce.

Most Pakistani public school students drop out of school by the age of nine, and only half of

Pakistani children who complete five years of primary school are considered literate.32

Educational activities will improve workforce capacity and foster in communities recognition for quality education in addition to creating and expanding teaching and learning materials and training programs.

Producing skilled employees and entrepreneurs will shift the labor force from its legacy of low-technology, low-skill, and low-margin manufacturing toward one that is positioned to compete globally in innovative service delivery and product creation. Workforce capacity development activities will prepare youth for workforce participation through skills training, civic engagement, and internship/job placement services. Programs will improve the access, quality, equity, and relevance of technical/vocational education and training nationwide, in partnership with the private sector. Ongoing support services to targeted youth and to women and girls aim to improve livelihoods, reduce the prospect of economic marginalization, and enable them to contribute to Pakistan’s economic growth.

31 National Institute of Population Studies [Pakistan] and ICF International, Pakistan Demographic and Health Survey 2012-13. The Demographic and Health Surveys (DHS) Program, December 2013 p. 163 https://dhsprogram.com/pubs/pdf/FR290/FR290.pdf 32 The Economist, “Pakistan is home to the most frenetic education reforms in the world,” January 4, 2018 https://www.economist.com/news/briefing/21733978-reformers-are-trying-make-up-generations-neglect-pakistan-home-most-frenetic https://dhsprogram.com/pubs/pdf/FR290/FR290.pdf…