Improving development impact
Public investments need to focus on activities that are long gestation, benefit society
Leila Yasmine Khan is an independent writer in the Netherlands. She has Master’s degrees in Philosophy, Argumentation and Rhetoric from the University of Amsterdam Daud Khan is a retired UN staff based in Rome. He has degrees in economics from LSE and Oxford, where he was a Rhodes Scholar
Moving Pakistan to a higher development trajectory will require us to improve the design, as well as the implementation of government programmes and projects. There is much to do in both areas.
With regard to design, there is a need for a radical shift in how government projects and programmes are identified. Usually the key question that drives the selection of projects is: “Will the investment generate quick and low-risk returns?” While this question may have a superficial attraction, it is fundamentally wrong. It is wrong because it does not separate the role of the public as opposed to the private sector. A project may be much needed and give excellent returns but if these accrue to a single individual or a small group, it is this individual or small group that should undertake the investment. Public investments need to focus on activities that are long gestation, benefit society as a whole or large numbers of people, and where returns are uncertain. These would include large infrastructure projects, poverty alleviation programmes, climate change mitigation activities, technology dissemination and research, particularly basic research. And even in these areas, there is a growing scope to partner with the private sector to reduce public layout.
A review of public investments in, for example, agriculture suggests that large sums are being spent on things like tractors and farm machinery (that mainly benefit private individuals) and watercourse lining (that benefit small groups of farmers). Other investments seem to be driven by considerations such as the scope for kickbacks and earnings for friends and relatives, and jobs for people with political backing.
Turning now to implementation, there are several major hindrances that make it difficult to get work completed in time and within costs. The most common problems are related to finance, in particular the timely release of adequate funds. Other bottlenecks relate to slow procedures for procurement and getting various regulatory approvals. Once procedures are complete, physical implementation is also often slow with contractors starting work with insufficient equipment, labour or working capital. Furthermore, should disputes with contractors or other parties arise, the matter may languish for years in the courts. Delays and cost overruns are true for almost all national projects. What is surprising is that even donor-funded projects, which do not face financial issues and have bespoke implementation arrangements, are also often way behind their agreed timelines!
In addition, there is rarely any attention given to adequate operations and management. For example, in the case of water resources projects, not enough thought is given to management structures, financially-sustainable cost recovery, adequate maintenance, or equitable water distribution. As a result, most projects suffer from inefficient operation and insufficient maintenance. This requires periodic rehabilitation — as in the case of most irrigation projects — or complete abandonment of the projects — as happened in the case of the reverse osmosis drinking water schemes in Sindh.
Improving the impact of projects in Pakistan is possible. There is much international experience — both good and bad — to draw lessons from. Close collaboration with development partners, as well as with countries with a proven experience of fast development, particularly China and Vietnam, can go a long way in identifying bottlenecks and best practices. Furthermore, there is a need to draw on the experience of the many multinational and foreign companies working successfully in Pakistan, as well as several high-performing domestic enterprises. The experience of these firms proves that there is nothing intrinsically difficult about planning and implementing good projects in Pakistan.
In order to improve things, governments, at both federal and provincial levels, have to accept the need for change. Usually there is little appetite for this particularly among middle managers who usually pass on the blame to bureaucratic hurdles and excessive political interference, particularly with regard to hiring, firing and transfer of staff. While there may be truth in this, there are at least two changes that could be made which could have a significant impact.
The first is to stop the constant transfer of senior government staff from one department to another — few secretaries in the provincial or federal governments are given the time to learn about their department, familiarise themselves with existing staff and ongoing programmes, formulate some kind of game plan, and to actually implement anything new. Their tenures are simply not long enough.
The second is to increase the involvement of the private sector and external experts in project management and supervision. In some donor-funded projects, particularly the larger ones, it is already standard practice to create a separate project unit staffed by consultants who are responsible for implementation. Clearly it would not be possible to create such units for each and every donor or government project. However, experience in Pakistan and elsewhere suggests that major improvements in efficiency are possible through the creation of bespoke Delivery Units, staffed with people with expertise in project and financial management. These units work best when they oversee a number of projects and programmes in a particular ministry or department; report directly to the highest level managers on problems and issues; and make suggestions on improvements and corrections. These units make the biggest impact when introducing changes in highly sensitive areas such as financial control systems and organisational restructuring. Clearly there are costs involved in setting up such units but these are more than offset by reduced waste, inefficiency and corruption. Such experiences need to be mainstreamed.
Published in The Express Tribune, November 16th, 2019.
With regard to design, there is a need for a radical shift in how government projects and programmes are identified. Usually the key question that drives the selection of projects is: “Will the investment generate quick and low-risk returns?” While this question may have a superficial attraction, it is fundamentally wrong. It is wrong because it does not separate the role of the public as opposed to the private sector. A project may be much needed and give excellent returns but if these accrue to a single individual or a small group, it is this individual or small group that should undertake the investment. Public investments need to focus on activities that are long gestation, benefit society as a whole or large numbers of people, and where returns are uncertain. These would include large infrastructure projects, poverty alleviation programmes, climate change mitigation activities, technology dissemination and research, particularly basic research. And even in these areas, there is a growing scope to partner with the private sector to reduce public layout.
A review of public investments in, for example, agriculture suggests that large sums are being spent on things like tractors and farm machinery (that mainly benefit private individuals) and watercourse lining (that benefit small groups of farmers). Other investments seem to be driven by considerations such as the scope for kickbacks and earnings for friends and relatives, and jobs for people with political backing.
Turning now to implementation, there are several major hindrances that make it difficult to get work completed in time and within costs. The most common problems are related to finance, in particular the timely release of adequate funds. Other bottlenecks relate to slow procedures for procurement and getting various regulatory approvals. Once procedures are complete, physical implementation is also often slow with contractors starting work with insufficient equipment, labour or working capital. Furthermore, should disputes with contractors or other parties arise, the matter may languish for years in the courts. Delays and cost overruns are true for almost all national projects. What is surprising is that even donor-funded projects, which do not face financial issues and have bespoke implementation arrangements, are also often way behind their agreed timelines!
In addition, there is rarely any attention given to adequate operations and management. For example, in the case of water resources projects, not enough thought is given to management structures, financially-sustainable cost recovery, adequate maintenance, or equitable water distribution. As a result, most projects suffer from inefficient operation and insufficient maintenance. This requires periodic rehabilitation — as in the case of most irrigation projects — or complete abandonment of the projects — as happened in the case of the reverse osmosis drinking water schemes in Sindh.
Improving the impact of projects in Pakistan is possible. There is much international experience — both good and bad — to draw lessons from. Close collaboration with development partners, as well as with countries with a proven experience of fast development, particularly China and Vietnam, can go a long way in identifying bottlenecks and best practices. Furthermore, there is a need to draw on the experience of the many multinational and foreign companies working successfully in Pakistan, as well as several high-performing domestic enterprises. The experience of these firms proves that there is nothing intrinsically difficult about planning and implementing good projects in Pakistan.
In order to improve things, governments, at both federal and provincial levels, have to accept the need for change. Usually there is little appetite for this particularly among middle managers who usually pass on the blame to bureaucratic hurdles and excessive political interference, particularly with regard to hiring, firing and transfer of staff. While there may be truth in this, there are at least two changes that could be made which could have a significant impact.
The first is to stop the constant transfer of senior government staff from one department to another — few secretaries in the provincial or federal governments are given the time to learn about their department, familiarise themselves with existing staff and ongoing programmes, formulate some kind of game plan, and to actually implement anything new. Their tenures are simply not long enough.
The second is to increase the involvement of the private sector and external experts in project management and supervision. In some donor-funded projects, particularly the larger ones, it is already standard practice to create a separate project unit staffed by consultants who are responsible for implementation. Clearly it would not be possible to create such units for each and every donor or government project. However, experience in Pakistan and elsewhere suggests that major improvements in efficiency are possible through the creation of bespoke Delivery Units, staffed with people with expertise in project and financial management. These units work best when they oversee a number of projects and programmes in a particular ministry or department; report directly to the highest level managers on problems and issues; and make suggestions on improvements and corrections. These units make the biggest impact when introducing changes in highly sensitive areas such as financial control systems and organisational restructuring. Clearly there are costs involved in setting up such units but these are more than offset by reduced waste, inefficiency and corruption. Such experiences need to be mainstreamed.
Published in The Express Tribune, November 16th, 2019.