Banking Sector Role in Disaster Relief

8/8/2019 Banking Sector Role in Disaster Relief

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Banking Sector

And

Flood Disaster Rehabilitation


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The recent floods provide an opportunity for the banking industry

to increase financial inclusion, diversify its products on sustainable

basis and play its due role in rebuilding the national economy. The

floods have caused widespread devastation in seventy eight districts

across Pakistan with huge losses of wealth in the form of crops,

livestock, roads, infrastructure, public and private buildings, etc.

Moreover, the floods have rendered approximately twenty million

homeless and posed serious health risks for the affected.

This calamity provides an opportunity to start afresh and build a

platform to embark on new territory by diversifying products and

increasing financial inclusion which will help bring down poverty level

in the country

Agriculture sector, which accounts for 21% of GDP and 45% of

employment, has been particularly hard hit and the direct losses to

major crops have been estimated at PKR 281 billion by the Federal

Ministry of Food & Agriculture & SUPARCO. In addition to agriculture,

the manufacturing sector which depends on agricultural inputs, has

also been adversely affected. The total losses amount to about USD 50

Billion, about 27% of the GDP1

The present scenario does not bode well for the agenda on

financial inclusion as a significant proportion of the flood-hit population

could be pushed below the poverty line. Moreover, those already

excluded will have little access to formal financial services such as

savings or insurance mechanisms to re-build their asset base.

The financial institutions are urged to come forward and play

their due role in rebuilding of the affected areas as the State Bank and

the Government would not be able to do it alone. So, it is

recommended

1. Write-offs existing loans where prospects of recovery are

slim.

2. Deferral of Loan Repayment.


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3. Restructuring/Rescheduling of overdue loans.

4. Reduced Mark up.

5. Provision of fresh credit at subsidized rate.


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Flood Damage Assessment Report

By

National Disaster ManagementAuthority


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Summary of Damages


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Province Wise Summary of Damages & Losses

(As of 02 Oct 2010)

ProvinceArea

Affected

(Sq.km)

Deaths Injured Houses DamagedTotal

Affected

Districts

Population AffectedCropped areas

(Hectares)Cattle head

Baluchistan 322 48 98 75,261 12 700,000 255,237 55,501

KPK* awaited 1,156 1,198 200,799 24 3,800,000 205,347 52,750

Punjab 14,047 110 350 509,814 11 8,200,000 774,610 3,572

Sind 30,132 393 1,202 1,114,629 17 7,184,550 1,056,758 263,703

AJK 1,800 71 87 7,106 7 200,000 30,820 288

G-B 7,500 183 60 2,830 7 100,000 3,635 4,669

Grand

Total 1961 2,995 1,910,439 78 20,184,550 2,326,407 324,982

Source: NDMA / PDMAs / SDMA * inclusive FATA


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Flood Effected Districts


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List of Flood Affected Districts(As of 26 Sep 2010)

Name of Province

Total affected

Districts

Severely

Affected Moderately affected

KPK* 24 10 14

Punjab 11 7 4

Sindh 17 9 8

Balochistan 12 2 10

AJK 7 1 6

GB 7 0 7

GRAND TOTAL 78 29 49
http://www.pakistanfloods.pk/#TB_inline?height=500&width=550&inlineId=tb01286312568&caption=KPK*http://www.pakistanfloods.pk/#TB_inline?height=280&width=500&inlineId=tb11286312568&caption=Punjabhttp://www.pakistanfloods.pk/#TB_inline?height=350&width=500&inlineId=tb21286312568&caption=Sindhhttp://www.pakistanfloods.pk/#TB_inline?height=370&width=550&inlineId=tb31286312568&caption=Balochistanhttp://www.pakistanfloods.pk/#TB_inline?height=250&width=500&inlineId=tb41286312568&caption=AJKhttp://www.pakistanfloods.pk/#TB_inline?height=300&width=500&inlineId=tb51286312568&caption=GBhttp://www.pakistanfloods.pk/#TB_inline?height=280&width=500&inlineId=tb11286312568&caption=Punjabhttp://www.pakistanfloods.pk/#TB_inline?height=350&width=500&inlineId=tb21286312568&caption=Sindhhttp://www.pakistanfloods.pk/#TB_inline?height=370&width=550&inlineId=tb31286312568&caption=Balochistanhttp://www.pakistanfloods.pk/#TB_inline?height=250&width=500&inlineId=tb41286312568&caption=AJKhttp://www.pakistanfloods.pk/#TB_inline?height=300&width=500&inlineId=tb51286312568&caption=GBhttp://www.pakistanfloods.pk/#TB_inline?height=500&width=550&inlineId=tb01286312568&caption=KPK*


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Communication Network Damages

RoadsRailways


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RailwayLast Updated on Friday, 24 September 2010 17:01

S # Division Rs. in Million

1 Peshawar 1,600

2 Rawalpindi 100

3 Lahore 150

4 Multan 1,000

5 Sukkur 800

6 Karachi 600

7 Qutta 1,000

Total 5,250
http://www.pakistanfloods.pk/en/component/mailto/?tmpl=component&link=aHR0cDovL3d3dy5wYWtpc3RhbmZsb29kcy5way9lbi9kYW1hZ2UvY29tbS1uZXR3b3JrL3JhaWx3YXlzhttp://www.pakistanfloods.pk/en/damage/comm-network/railways?tmpl=component&print=1&page=


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Agriculture Damages


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Last Updated on Monday, 20 September 2010 17:15

Province Name of District

Cropped Area

Affected (Acres)

Cattle Head

Lost

PUNJAB

Mianwali 460,512 345

Khushab 59,710 136

Bhakkar 27,202 11

Layyah 83,000 30

Muzaffar garh 304,000 2,127

DG Khan 24,760 27

Rajanpur 320,604 207

RY Khan 117,379 725

Jhang 102,256 11

Multan 45,015 17

Sargodha 167,518 23

Total of Punjab 1,711,956 3,659

SIND

Kashmore 400,124 17,500

Shikarpur 110,189 838

Sukkur 102,300 124,448

Ghotki105,157 41,778

Jacobabad 687,000 615

Larkana 25,028 N.A

Qambar

Shahdadkot 497,380 44,039

Khairpur 46,055 32,290

Naushehro feroze 52,600 -

Dadu 99,190 533

S. Benazirabad 57,170 R.A

Hyderabad R.A R.A

Jamshoro 9,850 197

Matiari 63,500 26

T.M. Khan 20,160 R.A

T. Allahyar

Thatta 177,800 U.S

Badin

Sanghar

Mirpurkhas

Karachi

Total of Sindh 2,453,503 262,264

KPK

Tank
http://www.pakistanfloods.pk/en/component/mailto/?tmpl=component&link=aHR0cDovL3d3dy5wYWtpc3RhbmZsb29kcy5way9lbi9kYW1hZ2UvYWdyaWN1bHR1cmU=http://www.pakistanfloods.pk/en/damage/agriculture?tmpl=component&print=1&page=


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DI Khan 180252

Lakki Marwat 35

Bannu 89232 135

Mansehra

Abbottabad 1500

Haripur 141

Battagram 361

Kohistan 14908

Peshawar 92797 120

Charsada 40725 33559

Nowshera

Mardan 700 8

Swabi 100

Karak 6

Kohat 3750 302

Hangu 26

Swat 34470

Dir Lower

Malakand 35000 2

Shangla 20

Buner 3747 227

Dir Upper 25000 2720

Chitral 150 180

Province

Total of KPK 507423 52750

G-B

Gilgit 2,041 112

Skardu 1,144 1,213

Diamer 1,699 1,558

Ghizar 1,783 1,500

Ghanche 776 210

Astore 901 50

Hunza Nagar 639 26

Total of KPK 8,983 4,669

Baluchistan SIBI 64,000 15,031

Naseer Abad 349,400 unknown

Barkhan 4,205 unknown

kohlu 0 unknown

Kachhi 152,100 unknown

Kila Saifullah 0 0

Jafar Abad 0 unknown

loralai 0 0

Musa Khail 0 0

SHeerani 0 unknownKhuzdar 0 x


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Jhal Magsi

61,000 Not reported

Harnai 0 Unknown

Mastung 0 x

Lasbela 0 X

Quetta 0 x

Total of

Baluchistan

630,705

AJK Total of AJK 76,157 288

GRAND TOTAL 5,388,727 323,630


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Educational Facilities Damages


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Last Updated on Thursday, 23 September 2010 19:35

No. of schools affected by the flood (As of 21 Sep)

School Affected

Province No

Punjab 3,641

Sindh 6,852 KP 926

FATA

Balochistan 900

AJ&K 197

G-B

Total 12,516
http://www.pakistanfloods.pk/en/component/mailto/?tmpl=component&link=aHR0cDovL3d3dy5wYWtpc3RhbmZsb29kcy5way9lbi9kYW1hZ2UvZWR1Y2F0aW9uYWwtZmFjaWxpdGllcw==http://www.pakistanfloods.pk/en/damage/educational-facilities?tmpl=component&print=1&page=


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Project Description


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The project will rehabilitate and restore damaged farm land and

associated infrastructure in key agricultural sectors/subsectors damaged

by the 2010 floods. It will enable people to resume their normal lives by

restoring access to basic employment. The project design is based on theNational Disaster Management Authoritys damage assessment report.


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Project Benefits and Beneficiaries


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Immediate benefits are the restoration of rural economies

and services, creating income and employment for the inhabitants,

including the poor, in the flood-affected areas. Considering the extent

of damage and asset losses, the cost of rehabilitating public

infrastructure and facilities are exorbitant for the Government and for

the local communities. Support in terms of financial assistance,

adoption of appropriate flood-resistant design standards, and

strengthening of disaster preparedness and mitigation will be of

considerable benefit in protecting the poor and affected people from

falling further into poverty. It will help families resettle, provide a safer

and healthier environment, and stabilize livelihoods. The Project is

expected to provide about 12 million people -days of employment to

local skilled and unskilled labor.


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Rationale


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The devastating 2010 flooding caused severe damage

infrastructure and other assets, and disrupted economic activities,

inflicting heavy losses to agricultural and industrial output andslowed down expansion in services. Based on the World Bank damage

and needs assessment, the combined losses to assets and output

amounted to at least 40-50 billion, constituting27.78% of gross

domestic product.

The flooding also set backprogress achieved in poverty

reduction, with the poor and the vulnerable suffering most in

terms of losses to crops, livestock, property and housing, andreduced income opportunities. While the flood-related damage to

small-scale enterprises, export-oriented textile industry, leather, and

foods are likely to affect export growth, imports will come under

mounting pressures due to the sharp rise in post-flood imports of food

grains, medicines, and construction materials.

The widened current account deficit will deplete foreign exchange

reserves, requiring additional assistanceto reduce the external financialgap. Current expenditures will exceed the budgeted target for

FY2010, with increased expenditures for relief efforts, expansion of

food-assisted safety nets, operation and maintenance of

infrastructure, assistance to flood-affected farmers for commencing

production and manufacturing sector for rehabilitation, and grants to

dislocated people.

The revenue outturn for FY2010 will be lower than expected dueto the flood-induced shrinkage in the tax base. Even with diversion

of resources by the Government from low-priority development

projects to post-flood rehabilitation of infrastructure, the gap in

financing needs is estimated to be $5 billion to $7 billion, depending

on the level of improved standards applied during repair and

rehabilitation.

By providing financing to the agricultural sector, the project will

help the Government by financing a portion of the overall


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recovery program, as well as help restore the economic activity

essential for recovery of affected areas.

Financing Plan


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Allied Bank Limited

1. Increase in markup income of PKR 1,586,963.85 bln

2. Decrease in non-markup income of PKR 393,097.35 bln

3.Increase in profit of PKR

Muslim Commercial Bank Limited

1. Increase in markup income of PKR

2. Decrease in non-markup income of PKR

3. Increase in profit of PKR


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Programs Offered


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The consortium will be offering loans for the following purposes.

1. Agriculture Financing.

a. Agriculture Equipment Financing.

b. Agriculture Support Operations Financing.

c. Farm inputs financing.

d. Agriculture support infrastructure financing.

2. Poultry Farm Financing.

a. Poultry farm inputs financing.

b. Poultry farm creation financing.

c. Poultry farm refurbishment financing.

3. Livestock Financing.


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Program CostingAnd

Debt Collection


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Agriculture Financing:

This cost estimate is based on a study carried out by ministry of agriculture

government of Pakistan as per average per acre resources requirements. All other

agriculture financing will be carried out on case per case and on market rates for the

equipment or machinery in question.

Item Cost

(PKR)Land Lease 10,000Land Preparation 1,000Seed and Sowing 2,000Fertilizer 2,000Irrigation 1,000Harvesting Transport 3,000Total Expenditure 19,000

Poultry Farming:

This cost estimate is based on the prefeasibility study carried out by SMEDA

(Small and Medium Enterprise Development Authority Government of Pakistan), as per

the requirements for a farm size of 5,000 birds. The costs are given as per average per

head animal cost. All other financing will be carried out on case per case and on market

rates for the equipment or machinery in question.

Description Amount (in PKR.)

Machinery & equipment 62,000

Total Fixed Costs 62,000

Raw material inventory 159,614

Prepaid building rent 128,616

Total Working Capital 288,230

Total Project Cost 350,230


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Live-Stock Farming:

This cost estimate is based on the prefeasibility study carried out by SMEDA

(Small and Medium Enterprise Development Authority Government of Pakistan), as per

the requirements for a farm size of 130 animals. The costs are given as per average per

head animal cost. All other financing will be carried out on case per case and on market

rates for the equipment or machinery in question.

Description Amount (in PKR.)

Land & Building 8,170

Machinery & Equipment 456

Total Fixed Cost 8,623

Working Capital 1,436

Total 18,685

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Banking Sector Role in Disaster Relief

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