|Severe Tropical Storms Preparation and Response - Case Study Text (DHA/UNDRO - DMTP - UNDP, 1991, 58 p.)|
|Part Three: Rehabilitation and Reconstruction|
Responsibility for drafting a list of reconstruction priorities was assigned to the Minister of Finance at a somewhat chaotic cabinet meeting on October 6th. This was challenged during the meeting by the Minister of Internal Affairs, whose department encompassed local urban and rural planning and development. However, the less than impressive performance of that Ministrys emergency preparedness departments had been obvious to all, and there was little support. The Cabinets discussions touched upon a number of important issues concerning reconstruction, but the pressing needs of the relief action, and its likely political aftermath, meant that several key topics were omitted. Those that were covered included:
1. The need for early decisions on organizing detailed damage surveys, and the opportunities for collaboration with the local offices of the World Bank and UNDP
2. The need for an overall policy for restoring regional systems and encouraging the recovery of regional economic activity
3. The possibilities for allocating of responsibilities for recovery planning and management among various ministries
4. Questions on the need for new building codes and how to enforce them in practice.
5. The need for early decisions on reconstruction standards for critical facilities.
6. A short discussion on the need to implement new mitigation measures for housing, schools, hospitals, and other public buildings
7. Questions on the need for price controls on building materials
8. A call for an early decision on how to assess housing damage for compensation.
Over the next two days, an ad hoc task force within the Ministry of Finance developed an outline plan specifying the overall priorities for the first stages of rehabilitation and recovery. These covered a range of sectoral areas, and focused in particular at restoring the governments apparatus for monitoring and control of administrative activity, and the basic lifeline systems in the damaged zone. Quickly a distinction was being drawn in discussions between replacement reconstruction and development reconstruction. Replacement reconstruction aimed primarily at rebuilding destroyed capital stocks. Development reconstruction aiming at improving existing organizations, structures, and activities. Elements of both these were present in the first listings of priorities:
1. Restore power, and basic switching equipment at main telephone exchanges in urban centres to reconnect undamaged local government communications links.
2. Restore damaged or destroyed local telephone links between surviving government offices, police stations, public utilities, and medical centres.
3. Restore regional telecommunications and transport, starting with the main telephone trunk network links and the roads to Province centres, and the main international route leading through the damaged area. The need for a bus service out of the area (to allow those with relatives elsewhere to leave temporarily) was acute. There was also much concern amongst businessmen in the capital about the disruption of the major road and rail links with the neighbouring country - a strategic trading route. Two of the key bridges on this route had been either weakened or destroyed. There was an urgent need for pontoons, and for transhipment facilities for some loads.
4. To quickly improve mobility of people and flows of goods within the affected area. A key requirement was to open routes throughout the area to enable marketing of produce and goods. Priorities included removal of large trees blocking roads, clearing of landslips, and provision of pontoon ferries on washed-out trunk routes.
5. To begin to restore power generation and distribution. The need to restore power to urban water supplies, telephone exchanges, and hospitals was acute, the problem was complicated by the fact that much of the power for the area was transmitted on new long-distance power lines from hydroelectric dams to the North. Most of these lines were down, particularly at points where they crossed deep valleys in the foothills. A local natural gas-powered generating station was operative near the Freeport, and remained connected to the surviving elements of the regional grid. Its transmission lines to the industrial area were damaged, and several circuit breakers had failed. The oil company which ran the refinery was making urgent requests to the Prime Minister for the priority recovery of power transmission to their plant.
6. To remove bottlenecks in the availability of critical building materials. There was already a serious shortage of cement and steel reinforcing rods in the country as a whole, and prices were rising rapidly by the third day of the disaster.
7. To increase food production in affected area. There were five strands to this policy. First, to increase the acreage under cultivation, and to increase the availability of seeds, fertilizer, and pesticides. Second, to make tools, water pumps and insecticide sprayers available as widely as possible. Third, to improve access to loans where necessary. Fourth, to reconstruct damaged irrigation systems. Fifth, to increase availability of inputs for the fishing industry. And sixth, to rehabilitate veterinary services as quickly as possible.
8. To accelerate reconstruction in the health sector. This would include reconstructing clinics, health centres, and hospitals to cyclone-resistant standards, replacing damaged equipment, and attempting to ensure that local staffing constraints (as a result of housing damage, and movement of families) could be overcome.
9. To reconstruct damaged schools to a higher standard of wind resistance, and to incorporate simple extra provision for water storage and emergency sanitation.
10. To reinforce the facilities for vocational training, focusing on bottlenecks caused by shortages of skilled manpower, particularly in the construction sector. It was also recognised that there would be a need to provide income generation for groups who have been especially badly affected.
11. To establish a crash programme to support and educate reconstruction planners at both national and local level, including a request to a number of international donors for technical support.
Over the next week, the Cabinet attempted to agree on a structure for co-ordinating rehabilitation activity. They recognised a number of choices:
A specialised new independent commission for rehabilitation
Creation of an office for rehabilitation within an existing ministry
Formation of a co-ordinating office for rehabilitation within the Prime-Ministers department.
Eventually, a Cabinet-level rehabilitation committee was formed. After much discussion, its was decided to assign the co-ordination role to a new office within the Executive Office of the Prime-Minister. The functions of this office were presented in outline:
1. Overall planning: develop policy framework and disbursement procedures; develop work programmes and budgets
2. Co-ordination with other ministries
3. Monitoring and supervision of registration arrangements
4. Donor relations: liaison and reimbursement claims
5. NGO co-ordination
6. Finance and cash flow monitoring
7. Accounting (including accounting to donors)
8. Comprehensive programme monitoring
9. Co-ordination of grants and subsidies
10. Development of overall criteria for support and prioritization
The choice of criteria was significant. The initial listing contained nine general topics (see Box)
Criteria for Priority Rehabilitation
1. Direct and indirect contribution to restoring essential services
2. Total cost
3. Percentage of district and regional reconstruction budget
4. Likely timing to completion
5. Number of people served
6. Contribution to longer term development
7. Jobs created
8. Administrative manpower requirements
9. Debt implications
After strong pressure from the Ministry of Finance, it was agreed to establish an Office for Economic Preparedness within the Finance Ministry. In addition, the task of preparing a draft regional economic recovery plan was assigned to the members of the ad hoc task force within that Ministry.
Decisions on Compensation Policies
During this period, one of the most pressing problems was the need to decide on the policy for compensation for those who had lost relatives or property in the disaster. It was decided quickly that those who had lost relatives (or at least those who could prove their loss) would be eligible for a small grant, mainly to cover funeral expenses. The more difficult question was whether to make grants or loans to those who had lost property.
Those favouring loans argued that much less government funding would be needed to support reconstruction; money that was repaid can be assigned again for lending, and a much larger population could be supported than if grants were provided. They also suggested that there would be far more problems of switching from grants to loans that vice versa, because of the likely inequities. It would be much easier and more politically acceptable to change from loans to grants. Those favouring grants argued that many people would need to take on a major debt burden for reconstruction not only of housing, but also of productive facilities - businesses, agricultural production, and so on. This would probably also be in addition to arrears for previous loans for items destroyed in the disaster. They also suggested that many poorer people affected by the disaster would never be able to pay back loans anyway, and that those groups would in most cases be the worst affected. They also pointed out the problems likely to be encountered in setting interest rates for government backed loans, especially in relation to commercial interest rates.
It was commonly recognised that larger loans for housing reconstruction tend to provide extra employment in the construction sector, and that reconstruction of larger housing would generally be ineligible for grants anyway. Some also suggested that easily available loans might encourage producers to purchase more expensive, but more efficient tools and equipment.
Eventually, some elements of a compromise were reached when it was agreed that activities that were income-generating should receive loans at higher interests that those that are not (Eg. house rebuilding), and that people with very low incomes who could prove the loss of a home would, wherever possible, be given a cash grant equivalent to a small basic house.
Whatever the government policy, it was quickly clear that people were seeking credit. Subsequent investigation showed that in the rural areas affected by the Cyclone, the formal credit sector only provided about 40 percent of the total credit. Many members of the rural community obtained financing from relatives, traders, or small moneylenders. Rates were high (ranging from 20 to 100 percent per year), but this type of credit was quickly and easily available.
People who expected to get some kind of housing reconstruction grant from government (after an unguarded remark by a Government Minister on national radio) started to borrow early on from local money lenders at interest rates of 40% to 60%. Many also made informal arrangements with contractors to reconstruct housing on the expectation that the eventual government grant would be used to pay them back. Within the next two months, there was an outcry when government officials started to suggest that those who had already rebuilt a house would not be eligible for grants.
From the start, the commercial banks resisted calls to refinance or write-off loans on destroyed goods. Issue of new loans was delayed by damage to some bank records and problems in reconstructing communications. Postage delays, and damage to the embryonic data transmission networks lead to further delays in loan processing.