Questions for Pakistan’s politicians and partners

Policymakers, development partner must tear down ‘bric’ walls of bureaucracy, regulation, interventionism,...

More than two years have passed since my last trip to Pakistan. As US Ambassador to and a board member of the Asian Development Bank (ADB), I travelled to Islamabad and also to Karachi and surrounding rural areas, focusing on better understanding and asking questions about the success and failures of a range of development projects that have and will cost Pakistan and its donor nations and partners hundreds and hundreds of millions of dollars.

From massive hydroelectric projects to small-scale village-level assistance, efforts to assist Pakistan have been many, varied and more often than not, costly.  Since 1966, the ADB alone has disbursed more than $17 billion in loans for fighting poverty and infrastructure building efforts in Pakistan. Billions more have come in, including through efforts of the so-called Friends of Democratic Pakistan. But has such assistance, whether from the ADB, the World Bank or USAID been successful?

That is a critical question to ponder now that Pakistani election-year posturing is over and the nation’s political leaders — in power and in opposition — ideally seek to move the nation forward. For those future leaders, as well as those recently elected or re-elected to office in Pakistan, it will be important that they too gain a better understanding of the strengths and shortcomings of development assistance, whether for agricultural, transport, energy or financial sector projects. Ultimately, it will be the private sector that will drive and sustain growth.

During my time in Pakistan, I saw firsthand how lives were improved with donor-assisted increased access to sanitation, or through efforts supported by the Aga Khan Foundation to rebuild mountain communities destroyed by a devastating earthquake. But I also saw how ambitious projects, particularly involving privatisation efforts and outsourcing in the power sector, failed in implementation, underscoring the need for both better planning, due diligence, and continued and greater oversight at development partners and within the nations they seek to help.

Indeed, over the last two decades, the success rate of ADB projects, according to its own evaluations, has dropped significantly in Pakistan. Only some 32 per cent of ADB projects that were approved in the 2000s in Pakistan and that have been evaluated as of December 31, 2012, have been rated ‘successful’, according to the 2013 ADB country factsheet on Pakistan. That is down from a 59 per cent success rate for projects approved in the 1980s. Overall, only about half of all evaluated ADB projects were rated successful. In individual sectors, the story is equally challenging, if not troubling.  Only some 15 per cent of ADB-financed projects in the finance sector have been rated successful, as were some 33 per cent of projects involving water supply and other municipal infrastructure and services.

Clearly, it will be up to the people of Pakistan to shape their own future. Whether by paying taxes or following traffic rules, Pakistan’s leaders can set an example for their fellow citizens.  There also remain a few simple, persistent questions that I would encourage the nation’s development partners, as well as Pakistan’s own leaders to take to heart, regardless of political party.

Is Pakistan’s government bureaucracy hindering or fostering economic growth? The track record of the government’s performance is mixed everywhere. Whether in Islamabad or Washington, DC, a real fight against bureaucracy must be less about new organisation charts, and more about assessing what works and what does not. And then, getting rid of the latter. It’s the service quality, and not just the size, of the bureaucracy that matters. Government jobs should be viewed as neither spoils for victorious parties or as a source of lifetime benefits for those who hold those positions.

How are regulations impacting job creation? With large numbers of unemployed or underemployed, this remains one of the most critical questions for countries everywhere. Some level of regulation is essential. Yet, whether in the power industry or the agricultural sector, rules need to be consistent and enforced fairly, transparently and equally if everyday citizens and outside investors are to have the confidence to create the jobs — and supply the energy — essential for Pakistan’s future.

When is government intervention appropriate? Governments in Asia have rightly been criticised for seeking to pick winners and losers, often distorting markets and hurting competition. Pakistan’s large neighbours, China and India, provide numerous examples of intervention gone awry. Too often, however, government interventions and inefficiency can go hand in hand. Policymakers need to ensure such interventions, if any, are limited and are there as a last resort.

What more can be done to root out corruption? Throughout the world, corruption and cronyism also go hand-in-hand. America is not immune, ranking only 19th ‘least corrupt’ on Transparency International’s 2012 Corruption Perception Index, which looks at perceived levels of public sector corruption, with the lower the number, the better the ranking. As was much reported in the media in December 2012, Pakistan ranks a striking 139th out of more than 175 rated countries and territories. Few should take solace though in being perceived as ‘better’ than 144th ranked Bangladesh, or Somalia, at the bottom of the list. China ranks 80th, and India 94th. Looked at another way, the perception index put Pakistan as the 33rd ‘most corrupt’ nation when it comes to perceived levels of public corruption. Allegations of favouritism or leniency must be investigated, institutions strengthened, and individuals held accountable if people are to have any confidence in the public sector.

At the heart of these four simple questions is my view that policymakers and development partners everywhere must commit to tear down new ‘bric’ walls being built of bureaucracy, regulation, interventionism and corruption. The prescription for economic growth in the world’s developed and developing nations is straightforward — improve the bureaucracy, regulate fairly, intervene rarely and stamp out corruption.  Investment, capital and business confidence and growth will follow. This is also true for Pakistan.

What the nation — and indeed all of South Asia — needs now is to overcome division and discord, and to focus on innovation, infrastructure improvements and a policy environment that will foster the job growth necessary to drive the economy forward. Without question, all the people of Pakistan deserve no less than this.

Published in The Express Tribune, July 20^th, 2013.

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