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Independence Day – an ode to governance

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Published in The News International on August 17, 2008:

14th of August is as august as a day can get, both for Pakistanis who have witnessed the perils of partition and experienced the anguish of being in a subservient role as well as those of us born after independence; the latter can be attributed largely to ‘temporal depth’ – the characteristic understanding in nations of the past forming part of the present – and our collective consciousness, both of which we hope, will cascade to the next generation. Most of us would like to believe that the ‘nation’, as a territorial community and ‘patriotism’, as a commitment to the well being of our country, constitute an important aspect of our lives. However, other than periods of intense enthusiasm witnessed during the wars and the more recent sentiments of solidarity exhibited in the aftermath of the devastating October 2005 earthquake, we are often not clearly mindful of what truly constitutes the nation’s well being.

Allow me to illustrate that point further. As government entities at various levels, businesses, NGOs, civil society, politicians and citizens in general, we tend to focus on economic, social or political outcomes depending on who we are; however, in the process we tend to forget that the process attribute central to achieving end-points in each of these realms is governance. The public sector in general and various levels of government in particular, often feel that they have fulfilled that obligation with enunciation of polices and planning instruments, promulgation of statutes and by creating institutions. A range of Planning Commission instruments and sectoral policies, laws listed in chronological tables and indices of the Pakistan code and the plethora of state and quasi-state institutions as evidenced by the Federal Bureau of Statistics’ inventories are evidence of that. It must be appreciated however, that policies, laws and other instruments can only be implemented through effective governance; more importantly, the latter is also the means through which institutions can create an impact.

Here it is important to review the context in which the word governance is being used herewith. Governance operates in organizations of any size – from governments at several levels, businesses, corporations, NGOs, partnerships or for that matter any other purposeful activity. It can also have several connotations: corporate governance, global governance, national governance, local governance and so on. The context in which governance is being used in relation to Pakistan’s Independence Day is governance within government agencies at various levels of the government – federal, provincial and local, other state agencies and agencies mandated with a public role. The word limit on this opinion precludes a reference to specific issues of governance within the local government system, the basic premise of which is currently under debate; the subject will be addressed in a later opinion in these columns.

It is well established that good governance is critical for achieving socioeconomic development and poverty reduction; in addition, effective and transparent governance within public sector institutions can also shape business ethics and corporate governance, which can enable businesses and the private sector to play a more effective role in national development by providing a level playing field and building safeguards against capture by vested interest groups. Good public sector governance can additionally shape democratic ethos and ensure representative governments on the one hand and bring objectivity and impartiality to global governance and decision making on the other; the latter in particular is needed for peaceful and meaningful co-existence in a unipolar world – a consideration particularly relevant for Pakistan.

The primary responsibility of every government and state agency therefore is to conform its operations with desirable governance characteristics to ensure that governance is participatory, consensus-oriented, responsive, effective and efficient, equitable and inclusive and follows the rule of law. Every crisis observed in the country today can be attributed to a violation of one or the other of these eight attributes.

Every government starts off underscoring the need to reform governance and strengthen institutions; that lack of institutional robustness is a national predicament, has become a sine-qua-non of political rhetoric in Pakistan. However, we need to understand what it actually means to actualize this commitment in terms of setting directions, day-to-day decision making, and implementing decisions. Two attributes are critical in this respect. The first attribute includes transparency, consensus building and participation in decision making in order to avoid capture by vested interest groups whereas the second attribute relates to accountability of all the actors in public institutions at the political, performance and financial levels to ensure that oversight and regulatory functions are not exploited by the powerful and the elite.

In order to ensure institutionalization of these attributes, reform of governance is needed not just in the executive arm of the state as is conventionally envisaged, but the two other pillars of the state in addition to the political system. The government needs to build on efforts in the pipeline, initiatives of the establishment division, work of reform commissions and consolidate development partner efforts to reengineer business processes of the state, reform civil structures and move towards the desired functional separation of policy making, regulation and implementation functions of the government, which is critical to bringing transparency in public sector processes.

To wrap up recommendations on governance assuming that the onus of responsibility lies solely on governments would be simplistic. There are many actors in governance. The role of the media, lobbyists, political parties, NGOs and businesses in governance is well recognized; in Pakistan’s situation particularly in the local government realms, landlords, land mafias, religious groups and other factions also shape the societal political culture and hence influence governance. Part of this population occasionally engages in an ‘advocacy mode’ in relation to the affairs of the state as was witnessed during the recent judicial crisis. However in general, outside of the corridors of power, citizens generally do not take into account the impact of their actions or inaction on the state’s institutional fabric and quality of governance. The reality is quite otherwise. The role of citizens, communities and the private sector in impacting public sector governance becomes evident when tax payers collude with tax administration, when the private sector colludes with regulators in allocation of subsidies, licenses, quotas and price ceilings, when commercial interests bypass procedures in order to increase market shares and when the business community seeks to modify policy stipulations through statutory regulatory or executive orders to suit their interests. When contractors and suppliers are in cahoots with public sector procuring agencies, in the event of private suppliers not meeting expected standards, or in cases of state commodities getting diverted and pilfered with private sector accomplices, the role of the actors outside of the government in shaping governance is additionally evident. We often do not recognize that a seemingly innocuous ‘sifarish’ can strengthen the culture of patronage, that the occasional trivial bribe we pay would help strengthen administrative rent seeking, that the payment we make to get a free service would conflict with the principles of delivery of public good and mis-target state services or that a seemingly insignificant unethical financial practice would have negative consequence for the economy.

Let us recognize therefore, that most of the crises that we face today are the outcomes of weaknesses in governance. Let us also acknowledge that it is not just those in the corridors of powers but also those outside of it that can help shape and improve governance. Let the Independence Day, observed two days ago lend impetus to a resolve to address what really needs to be improved in order to address the crises that we continue to face on many fronts. Each of has to go beyond our comfort zones and over-the-tea-cup-living-room discussions of poor governance to play a small part, with the realization that collectively this would have a major impact.

The author is the founder president of the NGO health sector think tank Heartfile. E-mail: sania@heartfile.org

National trade policy 2008-09 – the trade-health interface

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Published in The News International on August 09, 2008:

It is conventional for the commercial sector to assess and comment on the potential impact of a trade policy as was evidenced by the plethora of commentaries on the media subsequent to the enunciation of Pakistan’s National Trade Policy 2008/09, on the eve of July 18, 2008. The social sector seldom considers it within its remit to scrutinize possible impact of the course of action adopted on social outcomes nor does it create awareness about the need for trade policies to include elements relevant to their scope. However, the contemporary understanding of trade, which scopes beyond merchandise to also include services and human resources, is changing that notion and creates an imperative for the national trade policy to broaden its scope. The case of health is illustrated to demonstrate why and how this is so.

The World Trade Organization’s General Agreement on Trade and Services and majority of regional trade agreements allow countries to undertake commitments in trade and investments in health services if they so desire, in line with their own policy objectives. However, in the Uruguay round and in subsequent session negotiations, the lowest number of commitments by WTO members was in the health sector and not a single health negotiating proposal was advanced in the Doha development agenda. Despite this, cross border trade in health in countries such as Pakistan is burgeoning under the combined influence of a number of factors. In this regard, four channels of trade in services need to be taken into consideration while developing a trade policy.

First is the area of cross border supply of health services as a result of the 20th century information communication technology boom, which has created opportunities for business process outsourcing. Within the domain of health, Pakistan has become an option for low value off shore healthcare back office services like medical transcription, and billing due to low cost of labor. However, high value remote diagnostic and reporting services are limited due to the absence of regulatory frameworks and limited international marketing capacity of Pakistani companies – a gap the trade policy must address. Overall, the ‘outsource’ industry, has had a positive impact on employment generation; however, it does not add value to healthcare locally in the country, in terms of fostering improvements in quality through the spillover effect as has been observed in many other countries; it needs to be explored how that potential can be tapped. Additionally, on another note, it must be determined how Pakistan’s network connectivity, which has enabled development of the outsourcing industry, can be used to benefit geographically remote areas within the country through telemedicine.

The second mode of trade in health is consumption of health care services overseas. Many far eastern countries have leveraged the potential therein to improve their health systems, which then become an important source of foreign exchange and add to the multiplier effects of tourism related activities in the economy. This type of trade in services has taken an undesirable route in Pakistan, as in many other developing countries with burgeoning of kidney transplant tourism. In 2007, the Transplantation of Human Organs and Tissue Bill, 2007 was promulgated; however, since then the subject seems to have been relegated to the background; it is over simplistic to infer that the state’s job in curbing the illicit kidney trade comes to fruition with the promulgation of these statutes; impediments to the implementation of the law also need to be addressed.

Here it must also be recognized that medical tourism has limited potential in Pakistan for a number of reasons. The success of medical tourism depends on many factors: high degree of sophistication of indigenous health systems, high quality of health care at low costs, an expatriate-friendly environment and a well developed tourist industry, being the foremost. Based on these criteria it is clear that the medical tourism industry would not have an emerging trend in Pakistan at least in the short to medium term. It is therefore important that public resources earmarked for health should not be used to promote medical tourism at the cost of essential health services as there is little benefit to serving the equity objective in health except indirectly through improvements in quality.

The third mode of trade is commercial presence, of a foreign service provider in a host country for the purpose of supplying health related services. Pakistan is the sixth most populous country in the world and a large market. If the country’s overarching investment climate permits, investments in the healthcare sector from off shore sources, are likely to increase due to the overarching policies of liberalizing services traditionally in the public domain, which governments have pursued over the last ten years. While this approach has its benefits in terms of upgrading healthcare infrastructure, facilitating employment generation and providing a broad area of specialized medical services, it can also create inequalities by creating a two-tiered health system with high quality care being supplied to the affluent. The trade policy should therefore, articulate its position in this respect. Additionally, it should also outline the government’s principles for offering subsidies to foreign service providers in view of the concerns that that this can divert resources from health interventions that can be more equitable in their outlook.

The fourth mode in trade in health services relates to migration/movement of health professionals, out of the country. Such movement can exacerbate existing health workforce shortages as is particularly being observed in the case of nurses, paramedics, and public health professionals in Pakistan. The current doctor-nurse ratio has been 2.7:1 for some time as opposed to the recommended doctor to nurse ratio of 1:4; despite this, more than 1,800 nurses trained at state expense have moved out of the country over the last five years. A trade policy must therefore articulate the country’s policy position on trade of health related human resource. Clearly the priority should be to meet health workforce needs of the country through appropriate retention arrangements as opposed to a focus on export on the premise that the latter generates foreign remittances.

Another consideration of relevance to the trade-health interface is the WTO agreement on Trade Related Intellectual Property Rights (TRIPS); Pakistan is a signatory to the agreement and has promulgated the Patents Ordinance 2000 to comply with its requirements. Given that these stipulations have the potential to create barriers to access to medicines, a national trade policy should outline how the country envisages using flexibilities granted by the Doha Declaration on TRIPS agreement and Public Health (2001), namely compulsory licensing, parallel imports and bolar exemptions (which the word limit on this opinion preclude explaining) to overcome these barriers in the interest of public health. Under the National Trade Policy 2008/09, an intent has been signaled to develop plans for establishing a bioequivalence laboratory. Although this interest stems largely from the focus on export of generic drugs, with which trade in health is closely identified with in Pakistan, it must be recognized that it’s more important functions relate to quality improvement of medicines and institutionally helping implement flexibilities grated under the Doha Declaration on Public Health.

In summary therefore, it is important to see trade in a holistic but an equitable manner and broaden its scope from commodities to the entire value chain including services and human resource. Appropriate covenants in health and trade policies need to be developed and synchronized to ensure that trade norms maximize health benefits and minimize risks, especially for poor and vulnerable populations. Because of its specificities, health, services and human resource should feature as a separate item in Pakistan’s national trade policy. It is important to realize that policies are living documents and need revisiting to make necessary amendments from time to time.

The author is the founder and president of the think tank, Heartfile. E mail: sania@heartfile.org

Governance Empirics

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Published in The News International on August 03, 2008: 

Between the government and their critics, opinions relating to the government’s hundred-day performance are at the extreme ends of a spectrum. Unfortunately as a nation, we are not in the habit of being impartial in performance evaluation. The objective of this opinion is not to ascertain whether objectives were met or whether they were reflective of national priorities in the first place, but to emphasize that it is only through impartial empirics and the use of validated instruments and indicators, as opposed to self determined benchmarks, that meaningful inferences relevant to the performance of governance can be drawn. Of the various available tools, this opinion chooses the World Bank’s composite indicators, which measure governance in six domains; the World Bank has recently used this tool for its global report entitled Governance Matters – a cross country comparison assessing ‘broad notions of governance'; a detailed in-country exercise to build further on the data would be timely and useful. There can be many areas for a detailed Pakistan-specific assessment under each indicator; these are being summarized hereunder.

The first indicator is Voice and Accountability. In terms of mainstreaming voice, the government needs to review its current policies on freedom of association, censorship, media freedom, community participation in decision making and public access to information. With reference to the latter, the hundred day performance inventory refers to ‘initializing the legislative process on freedom of information statues’ after repealing the Freedom of Information Ordinance, 2002; here it needs to be ascertained what additional value these statutes will bring to disclosure, which can enable public discourse in larger national interest, in an environment where many secrecy acts can still be invoked to override freedom of information statutes. The government must also objectively analyze how well population and organized interests can make their voices heard in the public sector; the ultimate vehicle for this is the Parliament and a dispassionate review of how effective the Parliament has been as a law making and oversight institution, is an important consideration in governance assessment. Simple perception surveys on trust in the Parliament and satisfaction in democracy can be a useful starting point. Furthermore, the government must also review if it has granted appropriate and due civil and political rights in order to ensure mainstreaming of voice into decision making.

The other dimension measured under the indicator is accountability; it is important to know what strategies are being envisaged to enhance performance and financial accountability of public officials and what measures are being taken to strengthen channels of democratic and political accountability. A range of analytical tools can be employed in this area.

The second indicator is Political Stability and Absence of Violence/Terrorism. Evaluation of governance on this indicator should ascertain how Pakistan scores on attributes this indicator is meant to measure; technically stated, these include political assassination, urban rioting, insurgencies and rebellion, armed conflict, violent demonstrations, social unrest, international tensions, conflicts of ethnic, religious and regional nature, violent actions by underground organizations, extremism and internal conflict. Most of these manifestations have important causal determinants in Pakistan, which an objective evaluation should be able to determine and clearly state.

The third indicator is Government Effectiveness. It does not take sophisticated empirics but public perception and satisfaction level surveys relevant to the quality of supply of public goods such as education, health and public transportation and government citizen’s relationships to give a snapshot in this area. However, on the other hand, bureaucratic quality and governance capability, capacity of political authorities, policy consistency and implementation capacity are hard to measure and the impact of political alternation and policy inconsistency on public services and the impediments created for businesses is difficult to ascertain in tangible terms. What appears feasible however, is examination of the public management process for weaknesses as a proxy measure. For public management to be effective, recruitments need to be merit based, placements should match capacity and functionaries need to be given an enabling environment with due prerogatives, albeit with appropriate oversight. An objective assessment of governance should ascertain the extent to which this is presently the case in Pakistan.

The forth indicator is Regulatory Quality. Pakistan has traditionally employed the command and control style of regulation to correct market failures, which inherently breeds regulatory maladies. Governance empirics should explore the extent to which this has bred unfair competition, discriminatory tariffs, collusion in price and quality controls and licensing and the opportunity to grant excessive protection, over the years and ascertain the extent to which these prerogatives are abused. Here, it would also be important for the government to review its anti-monopoly strategies and competition regulatory arrangements and assess the level of support it is providing to existing institutional arrangements. Additionally, one of the critical prerequisites for ensuring transparency in regulation is to separate the institutional functions of policy making, regulation and implementation, given that mandating the same agencies/ministries with these roles create opportunities for collusion. There have been previous efforts to entrust regulation to independent autonomous regulatory agencies; the government should review the extent to which work on these has been sustained and progress in bridging gaps, in cases where they were apparent.

The fifth indicator is Rule of Law. The level of organized criminal activity (drugs and arms trafficking), importance of the informal economy and tax and custom evasion (under declaration and smuggling) are a measure of the rule of law. It has been anecdotally reported that 70% of our economy is unreported and that more than 50% of the revenue is lost in tax evasion. The government should determine and quantify these losses and delve into their determinants. In addition the enforceability of private contracts, civil procedures and property rights should also be within the remit of qualitative assessments. The current movement to restore the judiciary stresses on independence; however on the other hand matters related to the running, speediness, fairness and impartiality of the judicial process on the whole and the quality of police and judiciary, in general needs a dispassionate evaluation.

The sixth indicator is Control of Corruption. Despite being common, corruption is the most difficult governance attribute to measure as it does not leave a paper trail. Notwithstanding, there are assessment tools that can point to the magnitude and assess trends. Perception surveys, forensic investigations, market, service, exit and price comparison surveys can assist with evaluation whereas mathematical modeling of existing commission rates can give a dollar figure to the amount of resources pilfered from the state system; in addition, putting in place expenditure tracking systems and electronic wage and supply inventories can give data of relevance to corruption empirics while also acting as a deterrent against abuse.

In summary therefore, there is a need to take into account several considerations. First, it must be recognized that poor governance can seriously undermine the functional ability of governments; any sustainable effort aimed at systemic reform of government, therefore must begin with addressing issues of governance; evaluation and assessment has to be the backbone of such an effort. Secondly, that there are various attributes of governance which need measurement and tracking overtime; an objective impartial mechanism and assessment tools that can enable that, must be developed as a priority. Thirdly, that evaluation is just a means to an end and not an end in itself; it is more important to garner the commitment to utilize evidence from impartial evaluations for systemic reform of governance, the envisaged endpoint of this exercise. Finally, it is recommended that the government convene an apolitical independent task force to ascertain current challenges in governance and subsequently set benchmarks for their own performance based on the recommendations articulated therein. As a nation if do not learn to engage in a broader process of reforming governance, things will not change and the overarching issues of dwindling state’s writ, macroeconomic maladies and social sector malaise will continue to prevail.

The author is the founder and president of the think tank, Heartfile. E mail: sania@heartfile.org