Poor regulation

Unless regulatory frameworks improve, creating large bureaucracies to deal with rising challenges will keep failing.

The term ‘regulatory reform’, as one of its connotations, means improvements made to the quality of regulation of governance in a country. A regulatory agency, in context of governance, is defined as an official body exercising authority over some area of citizens' activity in a supervisory or governing capacity. Regulatory agencies typically should be concerned with making and supervising implementation of rules and regulations and imposing supervision or oversight for the benefit of the public at large. Such tasks in the modern world now sometimes require great expertise, since the rapidly changing world requires rapid implementation of public authority in certain sectors, especially when reform is to be effected in government service delivery.

This reform is indicated by governance indicators. Such indicators representing robust governance in Pakistan have tended to dramatically decline over the past decade; as a measure, Pakistan’s World Bank World Governance Indicator (WGI) ranking fell from 15.9 in 2000 to a low of 0.5 in 2009, placing Pakistan lowest in South Asia, even behind Afghanistan. Even though the transition to a democratically elected civilian government in 2008 was initially hailed as a giant leap forward, there has not been much progress even though the 2008 government has completed its tenure, the first democratically elected government to do so. Even then, indicators of the market economy and the state of democracy have not improved, but have instead tended to decline. For instance, the Bertelsmann Transformation Index of ‘stateness’ marginally declined from 4.6 to 4.5 out of 10, between 2006 and 2010. Thus, little seems to have changed. State responsiveness tends to remain static and state capability, in the face of providing service delivery, has significantly declined.

Pakistan was ranked in the 35^th percentile of the World Bank’s WGI on Regulatory Quality in 2008, considerably up from 29 in 2007, but down from 38.5 in 2006. In 2013, it has gone down even more. Pakistan’s regulatory systems are weak, primarily because regulations are often poorly specified, regulatory agencies lack capacity, policy is inconsistent and there is a lack of transparency. Legislation is sometimes passed, but then not fully rolled out or implemented. This raises several questions.  Where are the key bottlenecks in the system? Is failure to implement due to lack of capacity or other political-economy reasons?

One consequence of patronage politics is that people’s direct experience of the state is extremely limited. The public education system, land revenue administration, courts and police remain the primary interfaces. Yet, incorporation of the law and order system into local patronage networks has created a market for dispute resolution. Inequality has shrunk in urban areas, contributing to poverty reduction, while in rural areas inequality has increased. This trend occurred while growth was still robust, indicating that inequality is widening for the unskilled rural poor and closing for the more educated and skilled urban population. Growth levels are currently not sufficiently high to reverse this trend and the 2010 floods have pushed more rural people below the poverty line. Although there have been reform interventions to protect gender and minority rights, this remains an area where progress is constrained by deep-set structural inequalities and the rise of conservative values. The gulf between the political elite and the majority is mirrored by civil society, and indirect rule has opened up an unregulated chasm in state-society relations which civil (and uncivil) society of one form or another has often filled. At one level, Pakistan has an impressive history of activism to protect gender, minority and democratic rights and advocate for social improvement, yet at another, Pakistan has a history of violent community-based political and sectarian organisations.

Regulatory reform proves difficult as specialisation, role separation and coordination is perceived as threatening or unnecessary, especially within bureaucracy in Pakistan. Regulation is a hot issue in all sectors in Pakistan and the challenge is to move the exploration of reforms beyond the tendency to think either of departmental silos or large additional bureaucracies. In this environment, successful implementation of the Eighteenth Amendment will be determined by the ability of legislators and bureaucrats to properly align incentives for reform, which has not been forthcoming so far.

Institution and peace-building work is needed to address the key issues of indirect rule, regionalism and radicalisation. Challenges such as contested religious values, ethnic divisions and insecure boundaries, and lack of institutional and fiscal capacity pose severe challenges to institutionalising robust structures. Unless regulatory frameworks in Pakistan are drastically improved or redefined, the typical knee-jerk reaction of creating large bureaucracies to deal with rising challenges will keep failing.

Published in The Express Tribune, April 21^st, 2013.