The Ingredients of Good Governance

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Shahid Kardar*

Governance is the manner in, and the process by, which authority is exercised, especially with respect to the management of a country’s economic  and  social  resources. This,  in  turn,  entails  the  capacity of institutions (both formal and informal) to design, formulate, and implement policies. It includes the discharge of functions that enable the efficient and effective delivery of public services fairly, while holding the service providers accountable to the service recipients.

Since the widely held perception in the country today is of persistent corruption and abuse of power at the highest levels, it is not surprising that Pakistan scores poorly on the indicators of governance. On corruption (Transparency International) and general governance (DIFID), Pakistan ranked 139 and 162 out of 180 and 199 countries respectively in 2009. In a ranking of fourteen Asian countries by the World Bank, according to six sets of governance indicators, Pakistan is next to last, higher only to Yemen, behind Bangladesh and well behind India, the Philippines and Indonesia.

There is, therefore, a sense of deep disenchantment, helplessness and despair verging on desperation and anger among the youth. This has resulted in their alienation from the state and society. The widespread belief is that that the polity cannot be saved from further degeneration; that the process cannot be reversed nor effectively tackled; that every effort to correct the situation would be thwarted – if not corrupted in the process. This disgruntlement with the elite is not without substance. For moral legitimacy it is not enough to win an election and claim a right to continue to rule even without ensuring security of life and property of the people and providing them decent quality public services. The political leadership has managed to create a poltico-economic culture where misuse of public money is accepted as a national culture. Such is the extent of   disillusionment that people no longer believe that sterilized, clean politics and a rule-governed system is possible any longer, thereby leaving them no option but to reconcile to a choice between one criminal and another. A case in point is that of Mr. Dasti who lied about his academic qualifications but was nevertheless again voted into parliament with all-out official support.

According to a World Bank study of over 100 countries conducted some years ago, 65% of the wealth of nations could be explained by investment in human and social capital (in the case of Japan the study concluded that as much as 85% of this wealth could be explained by this factor), 20% by natural capital and a mere 16% of the wealth by investments in physical assets.

The results of the study emphasized that for improving the efficiency of society there is no substitute for a clean and honest government. Furthermore, the moral resources of society include social norms and values and the quality of mutual trust. All these factors are covered under the rubric of governance, a major reason for the country’s poor economic and social outcomes today.

There are three distinct and important aspects of governance. These include the following:

a)            The form of political regime (i.e., does the government have legitimacy?);

b)            The process by which authority is exercised to manage the economic and social resources for development. This refers to the accountability of political and official elements of government (freedom of media, transparent decision-making processes and accountability mechanisms), and;

c)            The  capacity  and  competence  of  governments  to  design, formulate and implement policies and thereafter discharge the functions mandated to it.

Almost Sixty-three years on and we have still not been able to fully establish good and transparent governance systems. The principal reasons have included:

a)            Lack of direction and poor policy decisions which created an imbalance in the roles of the public and the private sectors for establishing systems of good governance.

b)            Creation  of  private  empires  through  systems  that  enabled rent extraction, starting with the distribution of evacuee trust properties and permits and licences to establish industries or export and import goods and the establishment of incentive regimes that either subsidized the annual operations of a variety of enterprises or enabled them to earn super profits by restricting competition. Such preferential treatment corrupted society by enabling a handful of entrepreneurs to gain at the expense of ordinary consumers and enabled the inefficient to prosper. The most recent examples of structures that facilitate rent collections and blunt competition (by not allowing market mechanisms to work) are the decision to levy a 15% regulatory duty on exports of yarn, the high import duties on cars, especially the restrictions on the import of second hand cars, the duties that will now be levied on imported sugar to protect the cartel of inefficient producers of sugar and large farmers growing sugarcane at a very high cost with low yields and, the procurement price of wheat set at rates well above the price of the commodity in international markets.

c)            The experience of the vast majority of the people at the grass roots, through their interface with the administration, is that it is unresponsive, inefficient, unsympathetic and insensitive, if not callous, and sometimes even cruel to those whom they are meant to serve. The underlying problem is not so much a matter of simplifying procedures or establishing a grievance-redressal mechanism, but fundamentally of a systemic nature. Deficiencies in both the design of the legal framework and the way it works affects the performance of the economy. In Pakistan,

laws and regulations tend to be complicated, cumbersome and, at times, defective. Some laws are administered in ways contrary to their intent and spirit. Defects in law are compounded by weak, if not ineffective, enforcement which, in part, reflects the difficulties of monitoring compliance.

Abuse of discretionary powers in promoting officials (the most recent case being the decision of the prime minister to promote 54 officers to BPS-22, which was overruled by the Supreme Court) and appointments to senior positions in government- owned corporations such as the  the Steel Mills, etc. Other glaring examples include the political appointments of non- career ambassadors to the detriment of the country’s interests. It is indeed also an irony of fate that many of those appointed on political basis some years ago have now become advocates of a merit-based system, such are the depths of incompetence that we have reached. In particular, what is most disturbing is the manner in which the police has become politicized and corrupted.

Moreover, government functionaries have historically been allowed to wield excessive powers, largely because of the heavy concentration of administrative and financial powers. Furthermore, political interference has abetted corruption and protected the corrupt from being held accountable thereby creating an unholy alliance between politicians, administrators and criminals.

d)            Until recently, a weak and pliant judiciary, making it difficult for people to exercise their legal rights.

e)            Poor implementation and faulty/designs of plans not driven by any vision but projects financed by donors that did not fit into the country’s own development priorities. Such ill-advised projects also facilitated leakages through bribes, unmerited jobs for those well connected and perks for senior bureaucrats that approved these projects – in the form of cars and cell phones. All of these were funded under the project, through a system of financing that was, and continues to be devoid of transparency.

The prevalence of weak governance pervading all aspects of politics, economics and society has resulted in a culture that violates the concept of the rule of law, creating a crisis of the legitimacy of the state and its institutions. This gets reflected in the form of expenditures run wild, wastages and poor prioritization of spending obligations, pomp and grandeur in the life styles of elected representatives and officials financed from the public purse, poor delivery of public services to the less affluent segments of society, a predatory state apparatus, audacious pillage of state resources, open theft of electricity, a low tax to GDP ratio owing to widespread tax evasion and a host of tax exemptions to the rich, non-merit appointments to key positions in the public sector, etc.

In the light of the discussion above the critical ingredients of good governance can be identified as follows; most of which are in short supply in Pakistan.

a)            The establishment of a merit-based system, which ensures upward social mobility through the availability of formal education; educational achievement should be an important criterion for occupational and social mobility. An integrating principle of most societies is the recognition of the talent with which you are born rather than where, or the household in which, you are born. For competent individuals poverty should not serve as a deterrent to upward social mobility. In other words, instead of a closed elitist system of a rentier class, the objective should be to create a society which encourages competition and controls, at a minimum level, unproductive rent-seeking activities.

b)            Strong institutions –an  independent judiciary, an  active parliament and a constitutionally guaranteed decentralization of powers to those at the local level. Both the federal and provincial governments should be stripped of many of their powers which should devolve to local level governments that would be more accountable to the recipients of public services.

c)            Appointments to key public offices (like the Governor State Bank, the Attorney General, the Auditor General, the Chief Election Commissioner) and chief executives of corporations that may have to be retained in the public sector for some time to become effective only after ratification by the Senate.

d)            A vigilant civil society and a free media. In the absence of an informed public opinion, backed by strong non-governmental organizations in civil society, it is not possible to mobilize the resources and effort needed to ensure corrective action. To our good fortune, this is beginning to happen – an unintended but welcome outcome of the policy to expand and open up the electronic media.

e)            Systems that not only enforce the rule of law but also facilitate transparency by checking the free exercise of discretionary powers and by ensuring availability of detailed information on government spending (particularly on defence) – sheltered deals and expenditures are a product of regulation and opaque systems rather than of competition.

f)             An  early  privatization  of  all  government  corporations  – particularly the Steel Mills, PIA, the distribution companies for electricity and gas, Pakistan State Oil, etc. This would not only result in saving scarce public resources from being plundered and looted or lost through other leakages and inefficiencies, but would also dampen the temptation and incentive to seek public office.

g)            A capable civil service system that provides good management and supervises the allocation of resources. This will require civil service reform in which the remuneration package needs to be sufficiently raised in order to attract talent. The package also has to be transparent in the sense that all existing perks are monetized. (Such reform would become financially sustainable only after the size of government is pared drastically).

h)            For the people to have trust in the government, the social contract between the state and the citizens should ensure security of life and property and a fair system for resource distribution. This necessitates an equitable sharing of the burden of taxation and the provision of safety nets to enable the poor to exercise their economic rights. To guarantee a fair and broad-based tax structure, not only should incomes from all sources be subjected to taxation but the tax returns and wealth statements of all top functionaries of the government and their dependents should also be made public documents. These documents should pertain to the year prior to their elevation, during their tenures in these positions and two years thereafter. This would apply without exception to of all holders of public office including the President, the Prime Minister, members of parliament, the Chief of Army Staff, the Chairman JCSC and the heads of the navy and the air force, the Chief Justices, the Attorney General, the Auditor General, and all federal and provincial secretaries, etc. This should be a mandatory precondition for appointment to and continuing in these and other positions.