Economic Governance and Institutional Reforms
January 02, 2014
1.
Theoretical and
Empirical Insights
The link between
good governance and economic and social development has been well established
in the last few decades. There is a wide consensus that good governance must
lead to broad-based, inclusive economic growth and social development. It must
enable the state, civil society, and the private sector to enhance the
wellbeing of a large segment of the population. Economic policies, however
sound or benign, cannot disperse their gains widely unless the institutions
intermediating these policies are strong, efficient, and effective.
There is no precise definition of governance but a number of attempts
have been made to define it. According to the World Bank (1992), governance
refers to the manner in which public officials and institutions acquire and
exercise the authority to shape public policy and provide public goods and
services. Institutions establish formal and informal rules that determine
whether the public sector acts in its own interests or on behalf of all
citizens. Corruption is one outcome of poor governance involving the abuse of
public office for private gain. The World Bank’s (2012a) Governance and
Anticorruption Strategy of 2012 surmises that governance is about what the
state can do and how it does it—what the state can do is determined by its
capacity, legitimacy, and authority:
Capacity is the
availability of the state to procure and deliver goods and services, design and
implement policies, build infrastructure, collect revenue dispense justice and
maintain a conducive environment for the private sector. Legitimacy is simply
whether citizens feel the government has the right to govern and whether they
trust the government. Authority is the ability of the state to govern its
territory effectively, reach all citizens regardless of their location, gender
or ethnicity, maintain law and order and protect citizens from predation and
violence. It is the ability of the laws and rules of the state to trump all
other laws and rules (World Bank, 2012a).
The Asian
Development Bank (1997) considers the essence of governance to be sound
development management. The key dimensions of governance in this context are
public sector management, accountability, the legal framework for development,
and information and transparency. The Overseas Development Institute (2006)
identifies historical context, previous regime, sociocultural context, economic
system, and international environment as the main determinants of governance
and development. The six core principles identified by Hyden, Court, and Mease
(2004) that relate to good governance are (i) participation, (ii) fairness,
(iii) decency, (iv) accountability, (v) transparency, and (vi) efficiency.
Governance
assumed importance in the 1980s when developing countries began to feel the
adverse effects of the state’s extension to functions beyond its capacity. The
earlier concept of “modernization” that was propagated in the 1950s and 1960s
was synonymous with state-led development. It was argued that, where market
institutions and local entrepreneurs were weak, only state-owned enterprises
were capable of investing in and expanding the economy. The import
substitution-industrialization strategy provided the intellectual underpinning
to this argument, and state intervention in the choice of industries, choice of
production technologies, level of employment, and determination of inputs,
output, and prices became widely accepted policy instruments. Protection
against imports insulated the state-owned enterprises from the competitive
pressures of the market and generated substantial revenues for the governments
of poor countries through high tariffs. This “inward-looking” strategy was
pursued vigorously by many countries in Asia, Latin America, and Africa during
the 1950s, 1960s, and 1970s.
Empirical
academic research evaluating the experience of these countries during this
period presented persuasive evidence that this “statist” model, based on an
import substitution-industrialization strategy, had done developing countries
more harm than good. “Government failure” rather than “market failure” was
found to be a more pervasive phenomenon in the developing world. It was argued
that public bureaucracies were driven by their own narrow and parochial
interests rather than by the larger goals of development. The “soft state” syndrome
articulated by Myrdal (1968) for Asia and the “weak state” phenomenon
applicable to sub-Saharan Africa debunked the myth of a neutral, competent, and
legitimate state capable of enforcing policy or managing the enterprise to
maximize the collective good of society.
By the end of
the 1970s, a serious debt crisis in Latin America, dictatorial regimes’
mismanagement of the African economies, and economic stagnation in India—a
pioneer in practicing the “statist” model—had forced economists to rethink the
larger role of the state. In the meanwhile, the success stories of newly
industrializing countries such as the Republic of Korea, Taiwan, Singapore, and
Hong Kong demonstrated that opening up the economy to the rest of the world and
an “outward” export-oriented strategy could bring about rapid, sustained, and
shared growth for the majority of people.
Although the state played a proactive role in these countries and
intervened selectively, it avoided the mistakes made by proponents of the
“statist” model, which entailed the government’s widespread involvement through
political leaders and the bureaucracy in its pursuit to control the “commanding
heights” of the economy. The “heavy and overextended state” model was gradually
replaced by an approach where the state acted more as a strategist, guide,
facilitator, provider of infrastructure, and promoter of human development,
facilitating market competition among the private sector rather than occupying
directly the economic space of production, exchange, and distribution of goods
and services. The domestic private sector was allowed to compete with
industrial export markets while protection was avoided. Wade (1990)
characterizes the experience of the East Asian economies under the rubric of
“governed market” rather than either a free market or command economy.
The governance
structure in East Asia that led to these impressive outcomes was characterized
by a public bureaucracy that was, by and large, meritocratic,
performance-oriented, and free from political interference. Evans (1995) uses
the term “embedded autonomy” to describe these states. While keeping strong
contact with social groups crucial to development, these bureaucracies had
sufficient authority to maintain a distance from social pressures. Public-private
consultations, networks, and partnerships formed the bedrock of their mode of
functioning. Rodrik (1997) shows convincingly that the bureaucratic quality
explains much of the difference between the most and least successful East
Asian economies.
It also became obvious that high rates of economic growth can take place
without benefiting large segments of the population. Growth spurts that do not
yield any enduring benefits for a country’s population are to be shunned for
their inimical effects on social cohesion and the political unity of the
subgroups of a country’s population. Therefore, the two characteristics of a
successful and desirable development model, i.e., inclusive growth and
sustained growth, will spread the benefits of high economic growth among a vast
majority of the population over an extended period of time. Governance is the
glue that binds these two characteristics with economic growth to produce
sustained and inclusive development. If we accept this definition of
development, then we must consider how such an outcome can be achieved. This
question can be addressed by exploring the ways in which governance and
institutions interact.
How do
governance and institutions interact? Governance refers to the manner in which
power is exercised in the management of a country’s economic and social
resources. Good governance requires checks and balances in a country’s
institutional infrastructure, such that politicians and bureaucrats have the
flexibility to pursue the common good, while restraining arbitrary action and
corruption. According to Acemoglu and Johnson (2003), good institutions ensure
two desirable outcomes: (i) that there is relatively equal access to economic
opportunity (a level playing field), and (ii) those who provide labor or
capital are appropriately rewarded and their property rights protected.
The risk is
that the state’s monopoly on coercion, coupled with access to information not
available to the public, creates opportunities for public officials to promote
their own interests or those of friends or allies, at the expense of the common
interest. The possibilities for rent seeking and corruption are considerable.
This tension between the potential that institutions offer as instruments of
good governance and the incentives for state functionaries leading and working
in these institutions to hijack them for their narrow self-interest is the
major challenge that developing countries face.
A variety of
institutional mechanisms can provide the checks and balances necessary that
will lead to good governance and reduce corruption. To be enduring and
credible, these mechanisms need to be anchored in core state institutions.
Power can be divided horizontally among the judiciary, legislative, and
executive, and vertically among the central, provincial, and local authorities.
This balancing act between the different power structures ultimately determines
the governance outcomes for a particular country. If there is collusion among
these countervailing forces, the result is disastrous.
2.
Pakistan’s
Experience
Against this
background of theoretical and empirical evidence, we now review Pakistan’s
experience with respect to governance. Recapitulating a brief history of
governance in Pakistan provides the context in which reforms will be rooted.
Next, the rationale for these reforms is spelled out. Finally, we ask what can
be done to improve governance and strengthen institutions in Pakistan to
promote the welfare of the majority.
2.1.
History of
Governance in Pakistan
Pakistan
inherited a well-functioning judiciary, civil service, and military structure
but relatively weak legislative oversight at the time of independence. Over
time, the domination of the civil service and military over the affairs of the
state disrupted the evolution of the democratic political process and further
weakened the state’s legislative organ. The judicial arm, with a few
exceptions, plodded along, sanctifying the dominant role of the military and
civil service.
The
institutions inherited from the British rule more or less suited the needs of
the rulers at the time. Following independence, these requirements expanded in
scope and content while the expectations of the public and their elected
representatives grew. These inherited institutions failed to adapt to meet the
new challenges of development and social change, and to respond to the
heightened expectations and aspirations of a free people. The
“business-as-usual” mode of functioning, and the approach and attitudes of
incumbents holding top and middle positions in the bureaucracy and operating
these institutions did not endear them either to political leaders or to the
public.
Several commissions and committees were formed over the first 25 years
after independence to reform the administrative structure and civil services.
Some changes were introduced during Ayub Khan’s regime in the 1960s to improve
the efficiency of the secretariats, but the tendency toward centralized control
and personalized decision-making worsened in this period. The reluctance to
grant provincial autonomy to East Pakistan—the country’s most populous
province—so remote physically from the hub of decision making, i.e., Islamabad,
led to serious political backlash and the eventual breakup of the country into
two independent nations.
Pakistan
continued to suffer from what has been termed “confused federalism”, in which
weak local and provincial bodies are unable to match the ability of the central
government to mobilize resources and provide services. Whether it is health or
education, highways or agriculture, the federal government has much larger
programs under implementation than the provincial or local governments.
Although the money is spent in the provinces or districts, their inability to
identify, design, approve, and implement these projects caused resentment among
the provincial governments.
In 1973, a
populist government headed by Z. A. Bhutto took the first step in breaking the
steel frame of the civil services by taking away the constitutional guarantee
of job security. He also demolished the exclusive and privileged role of the
Civil Service of Pakistan within the overall structure of the public service.
The next 25
years witnessed a significant decline in the quality of new civil service
recruits as the implicit tradeoff between job security and low compensation
ceased to operate, and the expanding private sector, including multinational
corporations, offered more attractive career opportunities. The erosion of real
wages in the public sector over time also led to low morale, demotivation, and
inefficiency, and encouraged civil servants at all levels to resort to corrupt
practices. The abuse of discretionary powers, bureaucratic obstruction, and
delaying tactics adopted by government functionaries were all part of the
maneuvering to extract rents to supplement their pay.
In real terms,
the compensation paid to higher civil servants had declined by 2004 to only one
half of the 1994 package. The lower wages meant that the civil service no
longer attracted the most talented young men and women. Some civil service
incumbents, in their instinct for self-preservation, fell prey to the
machinations of the political regimes in power and many started to identify
with one political party or the other.
They also
benefited from the culture of patronage practiced by politicians. During the
1990s, the replacement of one political party by the other in the corridors of
power was followed by changes in the top bureaucracy. This growing tendency toward
informal political affiliation in order to tenaciously hold on to key jobs was
also responsible for the end of an impartial, neutral, and competent civil
service responsive to the needs of the common person. Loyalty to ministers,
chief ministers, and the Prime Minister took ascendancy over accountability to
the public. Frequent takeovers by military regimes and the consequential
screening of hundreds of civil servants made the civil service subservient to
the military rulers, eroded the authority of traditional institutions of
governance, and led to loss of initiative among the higher bureaucracy.
The 2001 devolution plan dealt another major blow to the Civil Service
of Pakistan when the posts of commissioner, deputy commissioner, and assistant
commissioner were abolished, and the reins of the district administration were
transferred to elected nazims
(mayors). For ordinary citizens, the government was tangibly embodied in these
civil servants, whom they approached on a daily basis. The substitution of civil
servants by elected heads of the administration upset the checks and balances
implicit in the previous administrative setup, and concentrated too much
discretionary power in the hands of indirectly elected individuals.
The police
assumed greater clout as a coercive force. Opportunities for collusion between
nazims and the police multiplied and, in many instances, alienated the common
citizen and diluted the impartiality of the administration at a grassroots
level. The sanctity of private property rights was threatened in several cases
where nazims had ordered unauthorized changes to be made to rural land records
in collusion with revenue department functionaries to benefit themselves and
their cronies. The district administration, which was the pivot for most
citizens, therefore, lost its impartiality and neutrality.
Most observers
and analysts within and outside Pakistan firmly believe that the quality of
economic governance and decision making and the capacity of the country’s key
institutions have gradually deteriorated over time.[1] Pakistan’s
main problem in maintaining macroeconomic stability, sustaining economic
growth, and delivering public services to the poor is weak governance and the
gradual but perceptible decline in institutional capacity. The elitist nature
of the state and society, and both the conflict and collusion among the
country’s various power structures can explain this phenomenon (see Husain,
1999).
Acemoglu and
Robinson’s (2011) recent study on extractive institutions as compared to
inclusive ones corroborates this observation. The military governments that
took power at various times were forced to make serious compromises to
establish their legitimacy. The elected leadership, when their turn came to
assume power, lacked not only the vision to help the divergent forces in
society coalesce, but also promoted individual self-interest rather than
collective public interest. Along with the decline in civil servants’
competence, this led to the gradual erosion of public institutions’ capabilities.
The state’s authority to govern its territory effectively was, therefore, badly
impaired.
Improved
economic governance was not pursued faithfully in Pakistan; its implementation
would have spanned several decades while the elected and military governments
that took power have had short time horizons. The elected governments, in their
quest to win the next election, and the military governments, in their attempt
to gain legitimacy became involved in ad-hoc and, at times, populist measures
without addressing the root cause, i.e., building institutional capacity to
deliver improved living standards for the majority of the population and
setting up a viable governance structure. Decision making according to the
whims and caprices of individuals in power therefore displaced informed and
well thought-out institutionalized processes.
Chronic
political instability and the frequent changes in political regimes have also
had disastrous consequences for economic governance in Pakistan. During the
1990s, there were too many changes marked by too much chaos. Invariably,
incoming governments abruptly abandoned, discontinued, or slowed down the
implementation of policies, projects, and programs inherited from the previous
regime. Given that institutions take a long time to nurture, the implementation
of projects is spread over many years, and the impact of policies is
considerably lagged, this premature abandonment caused more harm than good.
Starting all over again and before the benefits had begun to accrue, the government
was either overthrown or had to step down before completing its tenure. The
incoming government would begin the cycle afresh.
In 2001, the
Musharraf government introduced a local government system with the objective of
decentralizing authority, delegating power, and deconcentrating
decision-making. Although the system had some weakness (as outlined earlier)
that could have been rectified, the new government that took office in 2008
completely abandoned the system, creating a vacuum. The resumption of powers by
the provincial governments has once again made ordinary citizens’ lives
miserable since they cannot access services at the grassroots level or have
their problems resolved. The situation is quite the opposite in India, as aptly
summed up by Shourie (2010):
In India, there is a
consensus in practice so that whenever a group is in office, wherever it is in
office, it attempts to do the same sorts of things. But when it is in
opposition, where it is in opposition, it strains to block the same measures.
We have the Communists in West Bengal garnering credit for implementing reforms
in the State that they are blocking at the Centre.
What has been
the effect of this unending cycle of politically motivated, poor economic
governance on the majority of the population? A sense of deprivation and the
denial of basic economic rights create cynicism, negativism, and frustration.
The credibility of governments in power—any government—is completely eroded.
Distrust of ‘the government’ becomes so widespread and its credibility so low
that unsubstantiated rumors, mudslinging, and suspicion about their motives
assume a momentum of their own.
In the last six to seven years, the media, taking advantage of this
widespread lack of government credibility, has assumed the role of the
opposition party and accentuated the negativism. Markets, on the other hand,
function on sentiment. If market participants have confidence in the government
and its institutions, the overall result is stability in the markets, but if
there is lack of credibility, an air of uncertainty, and a crisis of
confidence, markets are apt to become nervous and volatile. However sound a
government’s policies may be, in circumstances of low credibility and mistrust,
private investment is hampered and the economy suffers. Credibility is a
fragile thing, and once lost takes a long time to re-establish.
A society with
a positive attitude gives enterprises far greater freedom to compete than a
society that perceives businesses as unethical or in cahoots with the government
for their personal gains. Patronage and cronyism in the form of licenses,
tariff concessions, and tax exemptions for a select few, the sale of public
assets to rulers’ favorites, and appointments to key public offices not on
merit but on the basis of loyalty, affiliation, and friendship sharpen the
negative sentiment. This is why, for instance, the program to privatize public
enterprises—economically desirable and badly needed—has almost been abandoned
ever since the perception, right or wrong, gained currency that Pakistan Steel
Mills was being sold for too low a price to cronies of the government.
Alesina’s
survey of the literature (1997) suggests that, when we compare the values of
political-institutional variables for the ten slowest and the ten fastest
growing economies in the study’s sample, the slowest countries tend to be more
ethnically fractionalized and more politically unstable. They also tend to have
much poorer indicators for the rule of law and institutional quality, a much
higher black market premium, and greater income inequality. Alesina, Özler,
Roubini, and Swagel (1996) find that political instability, government
fragility (the frequency of government changes and coup d’états), and
sociopolitical instability (political assassinations, riots, and revolutions)
have a negative effect on growth. Pakistan fits this model quite well, given
that episodes of frequent changes in government and socioeconomic instability
have been associated with low growth and macroeconomic turbulence.
2.2.
Rationale for
Reforms
It must be
conceded at the outset that the time horizon for the consummation and impact of
the proposed reforms is long-term, i.e., the next 10 to 20 years, and not
immediate- or short-term. The rationale for this plan should, therefore, be
viewed in the context of a long-term vision for Pakistan, the external
environment in which it operates as a country, lessons learnt from other
successful developing countries, diagnostic studies including public opinion
polls on government performance in Pakistan, and the public’s growing
expectations overall.
2.2.1.
Long-Term Vision
and External Environment
The New Economic
Growth Framework prepared by the Planning Commission (2011) envisages Pakistan
as a developed, industrialized, just, and prosperous nation by the end of the
next 20–25 years. This vision is to be achieved through rapid and sustainable
development in a resource-constrained economy by deploying knowledge inputs.
The framework proposes that the transition for achieving this objective be
managed by intelligently and efficiently exploiting globalization through
competitiveness, and that Pakistan should, therefore, opt to become an active
participant in the globalized economy for goods, labor, capital, technology,
and services.
This option has serious consequences for the future of governance in the
country. The imperative of integrating Pakistan in the larger global economy
places certain essential demands on the country, one of which is that state
structures and the instruments of government are redesigned to use knowledge
and technology inputs to create opportunities for increased productivity and
competitiveness within the constraints imposed by dwindling resources. Among
the world’s 180 nations who are Pakistan’s competitors for market share in an expanding
global economy, only those will survive that remain agile and can adapt to
changing demand patterns, supply value chains, and technological upgrades. The
main actors in a country that, together, impinge on its competitiveness and
productivity are the state, market, and civil society. Their respective roles
and interrelationships have to be, therefore, redefined and recalibrated.
Structural
economic reforms to improve Pakistan’s prospects for competing in the
globalized economy require stable, functioning, competent, and responsive
institutions for implementation. Unfortunately, at present, the country is
caught in a difficult logjam. While economic reforms create displacements in
the transition period, strong working institutions provide the resources and
armory to withstand these shocks, thus minimizing the costs of adjustment and
maximizing the benefits to the poor and marginalized. The urgency of building
strong institutions to implement these structural reforms is, therefore, quite
obvious.
Following this
logical sequence, the state’s various organs—the executive, judiciary, and
legislature—need to be assessed and evaluated to determine whether they are
capable of meeting this new challenge or if they need to be revamped to develop
new response capacities.
2.2.2.
Lessons from Other
Developing Countries
The role and
limitations of governments in various types of developing countries have been
analyzed at great length. The majority view is that governments should do what
they are capable of doing better than in the past. A strong and effective
government is needed rather than weak and expansive government. An
all-encompassing government is too cumbersome and centralized with overlapping
and competing interests, making it inefficient and unresponsive to the emerging
needs of the public. Civil servants are poorly trained, sub-optimally utilized,
unmotivated, and indifferent. Development economists have argued that effective
government in developing countries was not only necessary due to abundant
market failures, but also possibly even sufficient to achieve economic
development.
A number of
developing countries have successfully reformed their governments and tackled
market failures as well as achieved rapid economic development. How have they
managed to transform expansive governments into effective, well-focused,
well-functioning, and result-oriented ones? Interpreting the success of East
Asian countries, such as the newly industrializing countries, Asian countries,
and China is a matter for serious debate. Neoclassical economists attribute
their success to market-friendly, private sector-led growth and openness to
trade, with their governments providing macroeconomic stability, security of
person and property, and infrastructure services, while promoting research and
development, and investing in education, health, science, and technical
training. Others such as Wade (1990) and Amsden (1989) argue that an
interventionist state that steered a proactive industrial policy and picked its
winners was largely responsible for these countries’ success.
By now, there
is some consensus that, if labels and ideologies are set aside, the evidence
suggests that relatively successful countries have tended to promote
competition and avoid monopolies or oligopolies; ensured a level playing field
and the entry of newcomers in the market; made privatized firms face
competition; exercised regulatory vigilance (but eliminated inefficient and
outdated regulations); opened up the economy to international trade; provided
the way for judicial independence; provided dispute resolution mechanisms and
enforced contracts; promoted transparency; and observed the rule of law. In
short, their governments have provided an enabling environment for private
businesses in which to carry out the production, distribution, and trade of
goods and services without indulging directly in these activities.
The other
piece of empirical evidence that is beginning to gain wide acceptance is that
decentralization and greater devolution of power, authority, and resources to
lower tiers of government also makes a difference through better allocation and
the more efficient utilization of resources. Devolution also helps in moving
toward a relatively more egalitarian outcome in the provision of basic public
goods services.
Another effective way to promote human development and deliver social
services to poor segments of the population is through the wider participation
of the private sector, communities, and civil society organizations.
Participation, besides being considered a means to further human capabilities a
la Sen, is also a way of choosing the right kind of projects and ensuring that
development funds are used more judiciously. Many countries successfully use
private-public partnerships and public-nongovernment organization (NGO) or
civil society organization partnerships to provide infrastructure, education,
health, and other social services. These partnerships not only supplement
limited public resources and counter governance issues through monitoring,
evaluation, and corrective actions, they also enable local communities to participate
in decision making through their organizations. The reduced efficiency of
public sector expenditure can also be corrected through such partnerships.
2.2.3.
Changes in the
Pakistani Scene
In addition to historical reasons, the changes that have taken place in
Pakistan over the last several years and that are also likely to affect the
functioning of the government in the future, clearly point to the need for
reform. There are at least seven new developments that warrant serious
consideration.
First, it is
becoming increasingly apparent that the benefits of economic growth have not
been distributed equitably among lower-income groups, backward districts, rural
areas, and women. Although the government has used the channels of devolution
and targeted poverty interventions to spread these benefits, the results have
been less than satisfactory. Almost all studies point out that governance
institutions, i.e., the governmental machinery at the federal, provincial, and
local level, have become largely dysfunctional due to protracted neglect.
Almost all
comparative country rankings, whether originating from the World Bank’s
governance indicators, the World Economic Forum’s Global Competitiveness
Report, or other think-tanks and institutions have consistently rated Pakistan
fairly low in terms of public sector management, institutions, and governance.
The World Bank has been compiling governance indicators for its member
countries for the last 15 years. These include (i) voice and accountability,
(ii) political stability, (iii) government effectiveness, (iv) regulatory
burden, (v) rule of law, and (vi) corruption. The World Bank’s (2012b)
governance indicators for Pakistan are reproduced in Figure 10.1.
Figure 10.1: Pakistan’s ranking in governance
indicators
Source: Kaufmann, Kraay, and
Mastruzzi (2010).
Along with its
low human development indicators, this weak institutional dimension makes the
task of poverty reduction, income distribution, and delivery of public services
considerably difficult. The impact of good economic policies on the lower
strata of Pakistan’s society, particularly those who are illiterate and not
well connected, is thus muted. The widespread hue and cry about the absence of
the trickledown effect of good economic policies is a manifestation of the
country’s dysfunctional public sector governance. Government institutions have
to be strengthened to meet this challenge.
Second, the government’s responsibilities in the field of owning,
managing, and operating public enterprises and corporations have undergone a
significant change both in thinking as well as action over the last 16 years. A
large number of government-owned corporations, businesses, industrial units,
banks and financial institutions, and service providers have either been
privatized or ought to be privatized. This will reduce the burden on the
administrative apparatus at all levels of the government. Shedding these
activities also has serious implications for the oversight function of
ministries/departments in the post-privatization period.
Third, the
devolution of administrative, operational, and financial powers to the
provincial governments has introduced a completely new element to the
governance structure that will require suitable modifications in other tiers of
the government. The federal government has already transferred all the
functions in the Constitution’s concurrent list to the provincial governments.
The actual and projected increase in financial resources to the provinces under
the National Finance Commission awards has significantly expanded the fiscal
space available to them for directly carrying out essential public services.
However, the devolution remains incomplete because the next logical step of
reallocating administrative resources and strengthening the local government’s
capacity has not yet been taken; moreover, it has met fierce resistance from
provincial ministers and legislators. The unfortunate past association of local
government systems with military regimes has given rise to much apprehension,
especially in the multi-ethnic provinces of Sindh and Balochistan.
Fourth, the
unbundling of the policy, regulatory, and operational responsibilities under
these functions remains incomplete, uneven, and mixed across the ministries and
needs to be firmly rooted. Addressing the lack of competence and adequate
knowledge of regulatory functions will require the development of expertise in
this field as well as in policy formulation, implementation, and evaluation.
The experience with the regulatory agencies has not been very encouraging and
has led to unproductive confrontation between the ministries and regulators.
The thrust has been on grabbing power rather than finding solutions to the
problems faced by the industry or consumers.
Fifth, some
limited success has been achieved by fostering private-public partnerships in
infrastructure, education, and health, but these partnerships can only be
nurtured if the government departments and ministries concerned have adequate
skills to design concession agreements, build-operate-transfer (BOT) or
contractual arrangements, monitoring and evaluation tools, and legal recourse
to enforce the obligations and stipulations agreed to by their private sector
partners. Similarly, NGOs and community organizations such as the Rural Support
Program have been actively engaged in public service delivery in the education,
health, and water supply, etc. The government departments and ministries
concerned need to be reconfigured to develop their capacity to design and
operate such partnerships.
Sixth, there
is a great deal of uncertainty and anxiety among members of the civil services
concerning their career prospects. Specialists serving in ex-cadre jobs such as
scientists, engineers, medical doctors, and accountants, are demoralized
because they have limited opportunities for career progression. They also feel
that they are not treated at par with cadre service officers in matters of
promotion and advancement.
Seventh, the
switchover from manual to automated processes and the government’s commitment
to move toward e-government will require an assessment of the skill mix and
training requirements of existing and future civil servants throughout the
hierarchy. E-government will itself flatten the hierarchical texture and expose
redundancies in the system. At the same time, it will involve the need for
basic computer literacy at all levels and grades, digital archiving, storage,
and document retrieval. Consequently, only a few clerical and subordinate staff
positions can be utilized in the government’s future organization.
2.2.4.
Expectations-Delivery
Gap
South Asia’s recent political history clearly points to the failure of
successive governments to meet the expectations of the majority of their
population. This trend has become even more acute in the last decade or so with
the advent and spread of the electronic media. Although all the countries in
the region have performed well and attained respectable rates of economic
growth, every incumbent government has been voted out of power at the time of
election. The benefits of growth may have filtered down but their speed and
distribution have not satisfied the electorate.
The information and communication technology (ICT) revolution that has
touched even remote areas in these countries has tended to exaggerate the
disparities and led to higher expectations from the government. On one hand,
the capacity of government institutions responsible for the delivery of public
goods and services has been rapidly eroded while the large variety of goods and
services available and advertised by the electronic media has whetted the
appetite of the poor. These low-income groups believe that the means through
which they can acquire these goods and services for themselves and their
children is via public sector employment, education and training, and
government transfers.
In practice,
the allocation of public goods, services, employment, and subsidies is rationed
by access to government functionaries or the payment of bribes. Since these
groups have neither the access nor the money to pay bribes, they suffer from a
relative sense of deprivation while observing the influential and well-to-do
segments of the population preempt and enjoy the benefits of government jobs,
contracts, permits, and land, etc. Large untaxed incomes also accrue to the
same privileged groups and individuals. The resentment of this poor and
unconnected population is conveyed through the only instrument they possess,
i.e., their vote at the time of an election. This gap between expectations and
delivery is also one of Pakistan’s biggest challenges.
Popular perceptions
expressed in public opinion polls, media commentaries, academic forums, and the
observations of politicians and civil society actors all convey, with a few
honorable exceptions, a negative image of civil servants in Pakistan and a high
level of dissatisfaction with the functioning of ministries and other
government bodies at different tiers of the government. These perceptions are
in contrast to civil servants’ views, who see themselves as poorly paid, highly
demoralized, and under immense stress. They feel they have been unfairly
treated by their political masters and are unappreciated by the public.
Empirical studies and casual observations show that the root cause of this
disillusionment can be traced to the structural, procedural, and motivational
deficiencies in the overall system of governance. Any attempts to treat the
symptoms in an isolated manner without coming to grips with the root causes
will be counterproductive. A proposed reform package should be comprehensive
with a clear blueprint but the introduction of each set of reforms could be
phased and sequenced.
Nowhere is
this gap more glaring than in the government’s failure to protect the lives and
property of its citizens. Acts of terrorism, violence, and extremism have
become so commonplace over the last several years that the writ of the state
does not appear to exist any longer. State functionaries are either reluctant
or incapable of taking serious action against perpetrators and arrests and
apprehensions are rare. Known perpetrators are seldom convicted by the courts
because eye-witnesses are liable to retract their statements for fear of
retribution by those accused. Investigators and judges avoid getting involved
in such cases. Under these circumstances, the cost of crime is virtually zero
while the gains are enormous and almost guaranteed.
In light of
this changing landscape, the role and functions of the government need to be
redefined. The government has to: (i) provide external and internal security
for its people, (ii) collect taxes, (iii) manage public finances, (iv) conduct
foreign affairs, (v) maintain a stable macroeconomic environment including a
sound financial system, (vi) make available basic infrastructure facilities,
(vii) develop an education and training system capable of supplying skilled
human resources, (viii) encourage and undertake research and development, and
(ix) ensure an enabling regulatory framework for private sector and community
participation in development. The plan for future restructuring should, therefore,
be guided by these functions.
2.3.
Proposed Reform
Agenda
The governance
reform agenda for the future should, therefore, be designed to restructure and
revitalize government institutions to deliver the core functions of the state,
i.e., the provision of basic services—education, health, water and sanitation,
and security—to common citizens effectively and efficiently, and to promote
inclusive markets through which all citizens have an equal opportunity to
participate in the economy. The restructuring should lower transaction costs
and provide access without friction by curtailing the arbitrary exercise of
discretionary powers; reducing over-taxation; minimizing corruption, cronyism,
and collusion; and ensuring public order and security of life and property. The
proposed reforms should take place along the lines discussed below.
2.3.1.
Fostering the
Private Sector
To achieve
sustained economic growth, a competitive private sector has to be nurtured and
relied on. A major area of reforms in Pakistan should, therefore, be the
creation of space for the growth of new entrants in the private sector by
removing state-created constraints to their entry and operation. Despite the
pursuit of liberalization, deregulation, de-licensing, and disinvestment
policies over the last 20 years, the overbearing burden of government
interventions in the business lifecycle looms large. New businesses still face
dire problems in acquiring, titling, pricing, transferring, and possessing
land; obtaining no-objection certificates from various agencies; acquiring
water and gas connections, sewerage facilities, a reliable electricity supply,
and access roads; and securing finances for greenfield projects or new
enterprises using emerging technologies. The considerable powers of petty
inspectors from various departments/agencies can either make or break a
business.
The growing
trend toward the “informalization” of the economy, particularly by small and
medium enterprises, is testimony to the still-dominant nature of the
government. Over 96 percent of the establishments reported in the economic
census for 2005 fall in this category. The attitude of middle and lower
government functionaries in the provinces and districts toward private business
remains ambivalent—they may be inclined to harass a business to extract
pecuniary and nonpecuniary benefits for themselves or simply remain
distrustful, hostile, or hesitant toward private entrepreneurs. The involvement
of multiple agencies, the need for too many clearances, and avoidable delays at
every level raise transaction costs for new entrants. Unless the government
facilitates firm entry and exit, competitive forces will remain at bay and the
collusive and monopolistic practices of large businesses will continue to hurt
consumers and common citizens.
2.3.2.
Federal and
Provincial Restructuring
Federal-provincial
interaction in formulating national policy matters has no formal anchor after
the 18th Amendment. The National Council of Ministers, consisting of
federal and provincial ministers working under the aegis of the Council for
Common Interests should formulate national policies for the transferred
subjects. The federal government should remain responsible for international
relations and interprovincial coordination in these subjects.
In view of the
fresh challenges that face the country, we propose that the following new
ministries be set up within the revised structure by merging some existing
ministries and replacing others: ministries for energy, technology development,
regulatory affairs, human resource development, social protection,
infrastructure development, and special and underdeveloped areas. The existing
autonomous bodies and attached departments, corporations, companies, councils,
institutes, and subordinate offices at the federal government level should
either be retained, regrouped, merged, privatized, wound up, liquidated, or
where appropriate, transferred to the provinces.
2.3.3.
Civil Service
Reforms
A lingering
legacy that has contributed to the sub-optimal utilization of civil servants
and demoralized the majority among them has to do with the existence of
superior and nonsuperior services. The concept of the superior services should
be discarded so that all services at the national, federal, and provincial
levels are considered equal. Their terms and conditions in matters of
recruitment, promotion, career progression, and compensation should be similar.
Specialists and professionals working in ex-cadre positions should be brought
at par with the cadre services in terms of promotion and career advancement.
To provide equality of opportunity to all deserving civil servants, a
National Executive Service (NES) and Provincial Executive Services (PES) should
be constituted to staff all federal and provincial secretarial positions. Under
this reform, any Grade 19 (or equivalent) officer serving the government at the
federal or provincial level or autonomous body level and other eligible
professionals will be allowed to sit the competitive examination held by the
federal or provincial Public Service Commission. Those who qualify will be
selected for the NES. To redress the grievances of the smaller provinces
concerning their lack of representation at higher decision-making levels,
provincial and regional quotas will be introduced for entry to the NES. The NES
will comprise two streams—general and economic—thus promoting some limited
specialization among civil servants.
Given that
most government interaction with ordinary citizens takes place at the district
level and that the present stock of functionaries are ill-trained, poorly paid,
unhelpful, and discourteous individuals with arbitrary powers, a new setup is
required at the district level. A District Service should be constituted for
each district government. All employees serving in Grades 1–16 will become part
of the District Service and serve in districts of their choice throughout their
careers. Direct recruitment to Grades 11 and above will be made on merit
through the provincial Public Service Commission. The District Service will
consist of two cadres—generalist and technical. This will minimize political
pressure for transfers and postings since two thirds of the 2 million employees
working in the provinces will remain under their respective district
governments.
Training in technical and soft skills will be made mandatory for all
members of the District Services. The district governments will need to be
strengthened by establishing administrative linkages between union councils,
town committees/tehsil councils, and district governments. The office of
executive magistrate will need to be revived. In case the system of district
nazims is revived, which ought to be, law and order, disaster management, and
land record management should be removed from the nazims’ purview and transferred
to the deputy commissioners. The office of deputy commissioner should be
transformed into that of a district chief operating officer with an enlarged
scope of duties. The devolution of development activities, projects, programs,
and departments was working satisfactorily and should have remained with the
district governments.
All-Pakistan
services should consist of the proposed NES, a Pakistan Administrative Service
(presently the District Management Group), and the Police Service of Pakistan.
The federal services should comprise the Pakistan Foreign Service, Pakistan
Audit and Accounts Service, and Pakistan Taxation Service. Direct recruitment
to other existing services through the Central Superior Services examination
should be discontinued in a phased manner. The proposed provincial services
will include the PES, Provincial Management Service, Provincial Technical
Services, and Provincial Judicial Service. All direct recruitment to positions
at Grade 17 and above will be merit-based with due representation for regional
and women’s quotas. Recruitment in all cases will be made only by the federal
and provincial Public Service Commissions through an open, transparent,
competitive examination and interview process.
One of the main weaknesses of the present system is that civil servants
who enter the service at a young age are not compelled to upgrade their skills
or knowledge. Career advancement is divorced from skill and knowledge
acquisition and application. Promotion and placement policies should be aimed
at rewarding those who perform well and demonstrate potential for shouldering
higher responsibilities. The promotion policy should lay down criteria for each
level including the weight given to the performance
evaluation report (PER),
training and skills acquisition, rotation of assignments, diversity of
experience, and complexity of jobs, etc. Training for all civil servants at all
levels—cadre or ex-cadre—should be mandatory and linked explicitly to promotion
to the next grade. For this purpose, the existing training institutions should
be made autonomous and provided the requisite human and professional training
for engineers, scientists, accountants, health experts, educators, and
economists, etc., while new institutions could be established to fill any gaps.
A fair and
equitable compensation system cannot work well unless it is accompanied by an
objective performance appraisal system. The current system of annual
confidential reports has outlived its utility and should be replaced by an open
PER system in which goals and targets are agreed on at the beginning of the
year, key performance indicators to measure achievements are established, and
an open discussion is held between the appraisee and supervisor to identify
further development needs.
A mid-year
review should be held to assess progress and provide feedback, and an annual
evaluation held jointly through a discussion between the appraisee and his/her
supervisor. The appraisee can then sign the report or appeal to the supervisor
next in line against his/her immediate supervisor’s findings if need be. This
way, the PER will be used mostly as a tool for the development of the
individual to meet the needs of the organization. The system should focus on
poor or underperformers in particular to facilitate them in achieving better
performance outcomes.
About 100 key
public sector institutions in the country such as Pakistan International
Airlines, the Water and Power Development Authority, Pakistan State Oil, the
Oil and Gas Development Company, and Pakistan Railways, etc., have a critical
impact on economic and social outcomes. There have been serious questions about
the appointment of these organizations’ chief executives. Even when competent
individuals have been appointed, their detractors or other aspirants have
carried out malicious media campaigns and virtually paralyzed the chief
executive from making effective decisions.
To overcome
this tendency, the governance structure has to be made more transparent and
merit-based so that the right candidate is chosen as chief executive of an
organization through a well laid-out process. A special selection board should
screen and interview all candidates, and prepare a shortlist for consideration
by the Prime Minister. This process will minimize arbitrary use of
discretionary powers in appointments, attract capable candidates for these key
jobs, and discourage the trend of making frivolous charges against the selected
candidates.
Corruption
among the majority of civil servants cannot be curbed by moral persuasion but
instead by providing them with adequate compensation packages. The present
compensation structure under which officers are grossly underpaid in relation
to their comparators and do not earn a decent living wage has given rise to
poor morale and a sense of professional apathy. None of the reforms proposed
above will succeed unless the compensation package offered to the officer cadre
is substantially upgraded.
To keep the
government’s wage bill within the limits of the fiscal deficit, we propose
imposing a freeze on fresh recruitment to lower grades, except for teachers,
health workers, and police officers. Although this is likely to prove a
politically difficult decision, it should also be remembered that high fiscal
deficits result in high rates of inflation that undermine popular support for
the political party in power. After all, government employment accounts for
less than 6 percent of total employment in the country, and makeshift
employment in the public sector will not satisfy voters.
2.3.4.
Information and
Communication Technology
The world is moving swiftly toward ICT, which benefits the lives of
common citizens. E-government tools and developments in digital technology
offer promising prospects for improving government efficiency, reducing
transaction costs, making ordinary citizens’ lives more convenient, introducing
transparency and reducing discretionary powers and corruption, and tracking
performance and output. Despite the potentially powerful impact of
e-government, it has met with fierce resistance and contrived delays in adoption.
A modest beginning has been made in an ad hoc manner but the process still
lacks a concerted effort steered by the top leadership in the federal and
provincial governments.
Without
serious attention from the country’s leadership, the pace will remain uneven,
the impact will be marginal, and the opportunities foregone will be tremendous.
Training current government employees in e-filing, messaging, document sharing
and retrieval, reporting, and archiving will smooth the transition from a
paper-based environment. The transparency achieved through e-government will
also help curb corruption and the exercise of arbitrary discretionary powers by
government functionaries.
2.3.5.
Government Rules
and Regulations
Another public
grievance is the uneven and discriminatory application of government rules,
regulations, and instructions. The limited number of lower functionaries familiar
with these rules—of which most other people are unaware—tend to exploit their
power by hoarding this knowledge for their own benefit. Multiple rules exist on
the same subject where no systematic exercise has been undertaken to remove
them. All such instances of multiple rules, regulations, instructions, and
circulars in manuals should be removed, updated, and compiled in the form of a
concise and accurate manual. The establishment and finance manuals deserve
priority attention. After being updated and revised, these manuals should then
be uploaded to the Government of Pakistan’s websites so that they are
accessible to the public.
One reason for
the inefficient disposal of government business is the concentration of powers
in the hands of the finance and law ministries, the Establishment Division, and
Planning Commission. The Ministry of Finance had agreed to replace the outdated
concept of a financial advisory organization with a chief financial and
accounts officer in each ministry directly answerable to the principal
accounting officer, who is the secretary of the division. The full powers for
reappropriation within the approved budget should be delegated to the secretary
of the division, who can further delegate some financial powers to the head of
executive departments or other officers in the ministry.
Ministries/divisions
should bear full responsibility and accountability for their actions,
achievements, and failures, and thus exercise their power to deploy financial
and human resources in the most effective manner possible. The line ministries
should be fully empowered to spend their budgetary allocations subject to the
rules of the Public Procurement Regulatory Authority, with internal controls
and audits duly carried out and the support ministries ensuring that the rules
and procedures are complied with.
2.3.6.
Education, Health,
the Police, and Land Administration
In addition to
these medium- and long-term reforms in governance structure, processes, and
policies, four areas that affect people’s daily lives the most—education,
health, the police, and land administration—should also be reformed as
discussed below.
Governance
reforms in education are badly needed to uplift the state of literacy in
Pakistan. These reforms should begin with a clear division of responsibilities
between the federal, provincial, and district governments in service delivery.
The federal government should focus on higher education financing, regulations
and standards, and curricula, while the provincial governments are responsible
for college, technical, and vocational education. The district governments
should have exclusive power to manage and operate primary and secondary
education up to matriculation level. Examination reforms should be carried out
to bring the standards of various boards up to par. The management and teaching
cadres should be separated and career paths for the two cadres should not
discriminate against teachers.
A district
education board should be established in each district to bring about better
coordination and ensure uniform standards for public, private, and
not-for-profit schools. Each board should consist of eminent, reputable persons
with the district education officer as its secretary. The board will be
assisted by a school management committee empowered to oversee the school’s
functioning. Head teachers will have more administrative authority in running
schools and disciplining teachers, while arranging periodic school inspections.
The management
and teaching cadres should be separated, and career paths for the two cadres
should not discriminate against teachers. Endowments funds at the provincial
government level should be augmented every year out of the budget to fund
talented students to pursue their education at the country’s best institutions.
Student vouchers or stipends should be available for meritorious children from
poor families to attend private schools of their choice. Private-public
partnerships in the form of “adopt-a-school” programs should be encouraged and
given incentives. Female teachers should be employed in primary schools as far
as possible to promote girls’ enrollment.
Most of the
problems in healthcare delivery arise not from financial constraints but due to
poor management practices. The health management cadre should, therefore, be
separated from teaching and service providers in each province and the federal
government. Only those with the necessary aptitude should be recruited as
health managers and trained at the national and provincial health academies.
District, teaching, and other specialized hospitals should have their own
independent board of directors and be given autonomy in administrative,
financial, legal, and human resource matters. Health human resources and
development, particularly in the nursing and paramedical professions, require
urgent attention to improve their quality and volume. The health regulatory
framework should be made more effective and also set up at the provincial
level.
There is near-consensus that law and order and security problems have
worsened in recent years due to the inefficiency, corruption, and
politicization of the police force. The original Police Order 2002 was
compromised by amendments that weakened the functioning and accountability of
the police. Legislative amendments and revised disciplinary rules are needed to
allow police officers to perform their duties in accordance with the Police
Order and to remove their discretionary powers. The reversal to the earlier
Police Act after 2008 has only aggravated the situation by highly politicizing
the police. The police force should not fall under the purview of the Civil
Servants Act (except those belonging to the Police Service of Pakistan) since
it impedes internal accountability.
Disciplinary
rules should be framed under the Police Order. Provincial police offices should
be organized along functional lines and their powers delegated according to the
Police Order. Police stations should be merged, upgraded, and headed by
directly recruited Grade 17 officers with full responsibility for watch and
ward, investigation, and operations. The police force’s training, allowances,
mobility, logistics support, board and lodging, medical facilities, and welfare
fall short of their requirements and create demoralization; these should be
reviewed and strengthened. The traffic police in all large cities should be
reorganized to operate on the lines of the motorway police.
Land records
as maintained by patwaris are the
largest source of disputes and litigation in the country. Attempts to create a
digital database of land records have remained halfhearted except in Punjab
where some progress has been made. Land revenue assessment and collection, adjudication,
and dispute resolution should remain the responsibility of the district
governments but the maintenance and update of land records should be removed
from their purview and placed directly under the Board of Revenue. Patwaris should be replaced by revenue
assistants at BS 11 and above and recruited through the provincial Public
Service Commissions. The Colonization of Government Lands Act 1912 should be
revised to ensure better and more transparent allocation and utilization of
state land.
2.3.7.
Accountability of
Government Bodies
Another area
that needs to be addressed is the absence of effective accountability for
results. There is both too much and too little accountability of those involved
in public affairs in Pakistan. On one hand, the plethora of laws and
institutions such as anti-corruption bureaus, the National Accountability
Bureau (NAB), auditor general’s reports, public accounts committees of the
legislature, parliamentary oversight, judicial activism, and the ombudsman
system have created an atmosphere of fear and inertia, and hindered
decision-making among civil servants. On the other hand, instances of rampant
corruption, malpractices, nepotism and favoritism, and waste and inefficiency
are common folklore in the country’s administrative culture.
An over-emphasis on ritualistic compliance with procedures, rules, and
form has taken the place of substantive concern with results and outcomes for
welfare and justice. The NAB should be an independent body reporting directly
to the Prime Minister, and chaired by a candidate selected jointly by the Prime
Minister and leader of the opposition on the basis of competence, integrity,
and independence. The investigation and prosecution of white-collar financial
crimes and corruption should be entrusted to the NAB. Accountability courts
should be staffed by honest judges who are free from influences and pressure.
The provincial anti-corruption establishments should also be reorganized on the
lines of NAB.
Introducing
transparency by simplifying, codifying, and upgrading rules and regulations and
disseminating them widely through e-governance tools such as a dynamic website,
information kiosks, and online access to government functionaries would help
enforce internal accountability standards. At the same time, this would make it
easier for citizens to carry out hassle-free transactions. Strong pressure from
organized civil society advocacy groups in specific sectors or action by the
media, political parties, the private sector, and think-tanks can also compel
government departments and ministries to become more accountable for the
results they produce.
The governance
agenda outlined above should not be considered a technocratic exercise; it is
essentially a political one that takes into account the existing power
relationships in which the polity is rooted. Balancing the diverse interests of
the various stakeholders concerned will involve many politically tough choices,
which cannot be made by technocrats.
The
sustainability of these reforms requires broad consultation, consensus
building, and communication to articulate a long-term vision. People must see
beyond the immediate horizon and buy into future changes. Concerns, criticism,
and skepticism should be addressed. The scope, phasing, timing, implementation
strategies, and mitigation measures involving those who will lose as a result
of the reforms should be widely discussed and debated. If things do not proceed
the way they were conceptualized, corrective action should be taken in the
light of the feedback received. Citizens’ charters, surveys and report cards,
panels, and focus groups should be used as instruments to collect regular
feedback on the impact of reforms on different segments of society.
If implemented
earnestly, these recommendations will generate a much-needed sense of
confidence among ordinary citizens in the country, relieve undue pressure on
politicians to chase officers from various departments, and yield dividends to
the political parties in power in the federal and provincial governments.
3.
Conclusion
Our survey of
Pakistan’s governance structure and institutional infrastructure amply confirms
the validity of the theoretical literature and empirical evidence on governance
in developing countries. The elitist capture of the state, excessive
centralization of power both by elected and military rulers, chronic political
instability, politicization of the civil services and, until recently,
collusion between the power structures—the politicians, the army, and the
judiciary—have reinforced the tendency toward institutional decay and huge
governance deficits. Conflict between these power structures is not rooted in a
benign balancing act for the collective good of society, but in the assertion of
authority by different actors advancing their own parochial interests. Unlike
other societies, the cost that Pakistan is paying for poor governance and
institutional decay is relatively high and poses an existential threat to the
country.
This agenda
for reforms draws on Pakistan’s experience, lessons drawn from other successful
examples of developing countries, the changing nature of Pakistan’s
sociopolitical landscape, best practices, and characteristics peculiar to the
country’s situation. It forms a logical sequence to the 18th
Amendment to the Constitution and the recent National Finance Commission award.
It is now essential to realize that the value chain can be completed only by
taking this reform agenda to culmination over the next five years.
Appendix
Summary of Recommendations
Civil Services
1.
Ensure open,
transparent, merit-based recruitment to all levels and grades of public
services with regional representation as laid down in the Constitution.
2.
Institute
performance-based promotions and career progression for all public sector
employees with compulsory training at post-induction, mid-career, and senior
management levels.
3.
Ensure equal opportunities for career advancement for all employees
without preference or reservations for any particular class.
4.
Replace the
concept of the superior services with equality among all cadres and noncadres
of public servants.
5.
Grant a living
wage and compensation package, including decent retirement benefits, to all
civil servants.
6.
Observe strictly
the security of tenure of office for a specified period of time.
7.
Establish a
separate cadre of regular civil services at the federal, provincial, and
district levels coexisting with contractual appointments.
8.
Create an
all-Pakistan National Executive Service (NES) for senior management positions
drawn through a competitive process from among federal, provincial, and
district-level civil servants and external professionals.
9.
Introduce three
specialized cadres under the NES for economic management, social sector
management, and general management.
Structure of Federal, Provincial, and District
Governments
1.
Devolve powers,
responsibilities, and resources from the federal to the provincial governments,
and from the provincial to the local governments.
2.
Establish
intergovernmental structures with adequate authority and powers to formulate
and monitor policy.
3.
Clearly separate
the policymaking, regulatory, and operational responsibilities of different
ministries/provincial departments.
4.
Empower each
ministry/provincial department to make decisions and be held accountable for
their results, while ensuring they are adequately resourced to do so.
5.
Streamline,
rationalize, and transform the attached departments/autonomous
bodies/subordinate offices/field offices, etc., into fully functional arms of
the ministries in order to carry out operational and executive functions.
6.
Reduce the number
of layers in the hierarchy of each ministry/provincial department.
7.
Designate the
cabinet secretary as the main coordinator among the federal secretaries on the
lines of the provincial chief secretaries.
8.
Revive and
strengthen secretaries’ committees at the federal/provincial level as the main
vehicles for inter-ministerial coordination and dispute resolution among
various ministries.
9.
District-level
officers interacting with the public in day-to-day affairs should have adequate
powers, authority, status, and privileges to be able to resolve citizens’
problems and redress their grievances.
10. The police, revenue, education, water supply, and
health departments are highly relevant to ordinary citizens’ daily lives.
Accordingly, the internal governance structure of these departments, public
grievance redressal systems, and checks and balances on officials’
discretionary powers need to be introduced.
Business Process Reengineering
1.
All laws, rules,
regulations, circulars, and guidelines issued by any government
ministry/department/agency should be available to the public in updated form,
free of cost, and in a user-friendly format both in electronic and print forms
at public places.
2.
Service standards
with timelines for each type of service rendered at the district, thana, and union level should be
developed, disseminated, and posted at public places in each department.
3.
The rules of business at the federal, provincial, and district
government levels should be revised and simplified to empower secretaries/heads
of department/deputy commissioners to make decisions without need for multiple
references, clearances, and the back-and-forth movement of files. Decisions
made should be post-audited to ensure accountability rather than requiring
prior clearance.
4.
The delegation of
financial, administrative, procurement, and human resource management powers should
be revisited, and adequate powers commensurate with the authority should be
delegated at each tier of the hierarchy.
5.
Estacode, the
financial rules, accounting and audit rules, fundamental rules, and all other
rules in force should be reviewed systematically and revised to bring them in
line with modern management practices.
6.
E-government
should be introduced gradually and in phases. Technological solutions and
hardware and software applications are easy to institute but the most difficult
aspect is training users and incorporating a change in their culture, attitude,
and practices. E-government should be driven by business needs rather than
crafted as an elegant technical solution.
Institutions of Economic Governance in Pakistan
Federal Government
1.
Finance Division
2.
Planning
Commission
3.
Economic Affairs
Division
4.
Pakistan Bureau of
Statistics
5.
Commerce Division
6.
Privatization
Commission
7.
State Bank of
Pakistan
8.
Securities and
Exchange Commission of Pakistan (SECP)
9.
Federal Board of
Revenue (FBR)
10. Auditor General of Pakistan
11. Board of Investment
12. Trade Development Authority of Pakistan (TDAP)
13. Competition Commission of Pakistan (CCP)
14. Pakistan Telecommunication Authority (PTA)
15. Oil and Gas Regulatory Authority (OGRA)
16. National Electric Power Regulatory Authority (NEPRA)
17. Indus River System Authority (IRSA)
18. Engineering Development Board (EDB)
19. Private Power Infrastructure Board (PPIB)
20. Alternate Energy Development Board (AEDB)
21. Pakistan Standards and Quality Control Authority
(PSQCA)
Provincial Governments
1.
Finance Department
2.
Planning and
Development Department
3.
Board of Revenue
4.
Excise and
Taxation Departments
5.
Revenue Boards
* The author is former governor of the State Bank of
Pakistan, prior to which he held a number of senior positions in the World
Bank, including that of chief economist for the Bank’s East Asia and Pacific
Region.
[1] Transparency International, which
carries out perception surveys on corruption across a large cross-section of
countries, has consistently ranked Pakistan among the most corrupt countries.
Although the actual ranking has varied, the direction remains unchanged. World
Bank governance indicators, the Economist Intelligence Unit index, the failed
state index, international country risk guide, Heritage Foundation, and
Economic Forum index all corroborate the decline in various indicators of
governance and institutional strength.
Labels: Pakistan, Pakistan Economy, Pakistan: Moving the Economy Forward, Publications
posted by S A J Shirazi @ 1/02/2014 04:21:00 PM,
City Campus
104 - C, Gulberg III,
Lahore, Pakistan.
Phones: 92-42-35714936, 38474385
Fax: 92-42-36560905
Main Campus
Intersection Main Boulevard Phase VI
Burki Road
Lahore, Pakistan.
Phones: 36560935, 36560939
