Audit of USAID/Pakistan's Khyber Pakhtunkhwa Municipal Services Program

The program aimed to focus on essential urban services, including safe water, sanitation, and solid waste collection and disposal, with a budget of $102.71 million. The program was to be implemented in three Divisions of the Khyber Pakhtunkhwa Province: Dera Ismail Khan, Malakand, and Peshawar. However, three years after the signing of the initial agreement, the program was not achieving its goal. Only a few small activities had been completed in Peshawar, including the rehabilitation of four water supply systems, the cleaning of drains in 12 areas, and the procurement of various solid waste management vehicles and equipment. As of March 31, 2014, the mission had disbursed only $4.9 million (or 5.8 percent) of the $84.75 million in direct G2G assistance funds. The audit identified several weaknesses in the program, including the lack of significant results, the absence of planned activities in two of the three provincial divisions, and the failure to have an agreement with the Government of Khyber Pakhtunkhwa for earmarked funds. Additionally, the mission did not conduct an environmental examination promptly, and the Urban Policy Unit was not functioning as planned. Furthermore, the mission did not have a gender analysis process in place, which is a key component of ensuring equal access to public services for both males and females. The audit made 12 recommendations to help the mission improve various aspects of the program. After reviewing information provided in response to the draft report, the mission made management decisions on all recommendations and has taken final action on Recommendations 1, 3, 5, 6, 7, and 8. However, the mission disagreed with the management decision on recommendations 3, 7, and 8, and was requested to provide evidence of final action on the open recommendations. The program's failure to achieve its goal and the identified weaknesses highlight the need for USAID/Pakistan to reassess its approach and make a written justification on whether to continue the program or put the remaining $79 million to better use. This would involve a thorough evaluation of the program's progress, the effectiveness of its activities, and the potential benefits of redirecting the remaining funds to other initiatives that could have a greater impact on improving municipal service delivery in Khyber Pakhtunkhwa Province.