Retooling Institutions

Restructuring Federal, Provincial and District Governments

Two significant historic structural changes have taken place under the PPP-led coalition government in 2008.

Powers and functions on the concurrent list under the constitution have been transferred to the Provinces making provincial autonomy a more meaningful and operational concept.
The 2009 award of the National Finance Commission has tilted the balance of resource distribution in favour of the provincial governments.

Henceforth, the provinces rightfully would receive a larger share of the divisible pool. The next logical step is to form Provincial Finance Commissions and divide the resources among the Provincial and district governments. This requires demarcation of responsibilities between the two tiers, which is currently in a state of flux.

The devolution of twelve departments from the Provincial Government to the districts has improved access to basic services by the common citizens compared to the previous system. Local elected representatives are more responsive to the needs of their constituents in contrast to the Provincial and National Assembly members, who after getting elected, become quite inaccessible. They spend most of their time in Islamabad or provincial capitals and visit their constituencies for a day or two in the week. The local representatives, on the other hand, are available and accessible 24/7.

The 2001 Local Government suffers from many weaknesses including excessive strengthening of the office of District Nazim—an indirectly elected leader. Law and order, maintenance of revenue records and crisis and disaster management are the functions that require impartial and neutral administrators. The Local Government System should eliminate these weaknesses but the present efforts of the provincial governments and legislators to restore the 1979 Local Government System and completely dismantle the 2001 system would be a retrogressive step—a step away from good governance.

Several studies have produced evidence that the choices of development projects made by local councils had superior outcomes and more efficient resource allocation and utilisation compared to the centralised approvals made at the provincial capitals. Twelve devolved departments 171should remain the responsibilities of the District Governments with further devolution to the Tehsil and Union Councils. Provincial Governments should formulate policies, set up standards of performance, monitor the finances, performance and outcomes and take punitive actions against those indulging in malpractices and corruption. Well-functioning Local Governments can, in fact, bring political dividends as the population is better served and feels satisfied with the services rendered by the government.

In an ethnically diverse society a sense of direct participation in local governance is essential. The main reforms that are required to implement the Eighteenth Constitutional amendment as well as the NFC award are:

(a) The Federal Government should immediately shed powers and functions from the concurrent list to the provincial. Given the ethnic and regional composition of the country and the growing needs of an expanding population, the provinces and districts have to be empowered.

A National Council of Ministers, consisting of the Federal and Provincial Ministers working under the Council for Common Interest (CCI) should formulate the national policies for these transferred subjects. Consequently, the number of Federal Ministers can be cut to one half and the number of Divisions reduced by one third. In view of the new challenges that are facing the country, some new ministries, for example, for energy, human resource development, social protection etc., should be established.

(b) The existing large number of autonomous bodies and attached departments and corporations at the Federal and Provincial levels, should be regrouped and rationalised through merger, privatisation and liquidation, which will save enormous financial resources that can be diverted towards basic service delivery.
(c) The District Government has to be strengthened by establishing administrative linkages between the Union Councils, Town Committees/Tehsil Councils and District Governments. Executive magistrates have to be revived and Law and Order, Disaster Management and Land Record Management taken away from the purview of the District Nazim.
(d) E-government tools and development in digital technology should be utilised for improving the efficiency of government, reducing the costs of transactions, conveniencing ordinary citizens, introducing transparency and reducing discretionary powers and corruption and tracking the performance and output. Training of those already working in the government should make a smooth transition from a paper-based environment to electronic filing, messaging, sharing and exchanging of documents, retrieving, reporting and archiving.
(e) Uneven and discriminatory application of government rules, regulations and instructions are also a source of grief to citizens. A number of junior functionaries exploit their knowledge of the rules for their personal benefits. Multiple rules exist on the same subject as there has been no systematic weeding out exercise undertaken. All government manuals ought to be revised, updated and then uploaded on the websites of the government so that they are accessible to the public at large.

Reforms in Delivery of Basic Services

(a) Education is badly needed to increase literacy in the country.

Clear boundaries in the delivery of education have to be demarcated. The Federal Government should focus on higher education financing, regulations and standards and curriculum, the Provincial Governments on college, technical and vocational education and the District Governments on primary and secondary education up to matric. Examination reforms have to be carried out to bring the standards of various boards at par. Management and teaching cadres should be separated and the career paths for the two cadres should not discriminate against the teachers.

To bring about coordination and ensure uniformity in standards of public, private and not for profit schools, a district education board consisting of eminent citizens of integrity and competence should be established in each district.

The Board should be assisted by the school management committees empowered to oversee the school’s functioning. Head teachers will enjoy more administrative authority in running the schools and disciplining the teachers with the Board arranging inspection of schools periodically.

Endowment funds should be established to provide scholarships and financial assistance to the poorer talented students. Student vouchers or stipends should be given to meritorious children from the poor families to attend private schools of their choice. Private-public partnerships should be encouraged and offered incentives. Only female teachers should be employed where possible.

(b) Most of the problems in health care delivery arise not from financial constraints but poor management practices.

A health management cadre should therefore be separated from teaching, and service providers and those selected as health managers trained at the health academies. The district, teaching and specialised hospital should have their own autonomous board of directors with full powers for administrative, financial, legal and human resource matters and accountability. Health manpower development, the nursing and paramedical professions, should be given priority. Health regulatory framework should be made more effective and decentralised to the Provincial Governments.

(c) There is almost a consensus that law enforcement and security problems that have worsened in the recent years have in large part reflected the inefficiency, corruption and politicisation of the police force.

The original Police Order 2002 has been compromised by amendments that have weakened the functioning as well as the accountability of the police. Legislative amendments and revised disciplinary rules are needed to allow police officers to perform their duties in accordance with the Police Order. Disciplinary rules of police forces should be like other uniformed forces and not fall under the purview of the Civil Servants Act.

Investigation and prosecution are the weakest functions that are resulting in low rates of conviction by the courts. Judicial reforms at the lower level are also badly needed both for expeditious disposal of cases and honest adjudication of disputes. Police stations should be merged, upgraded, their records computerised and headed by a directly recruited Grade 17 officer with full responsibility for watch and ward, investigation and operations. Training, allowances, mobility, logistics support, lodging and boarding, medical facilities and welfare of the police force should be reviewed and strengthened. Traffic Police in all large cities should be organised and operated on the lines of Motorway Police.

(d) Land records as maintained by the Patwari are the single largest source of disputes and litigation in the country. The attempts to create a digital database of land records have remained half hearted.

Land revenue assessment and collection, adjudication and dispute resolution should remain under the District Government but the maintenance and update of land records should be taken away from the District Government and placed directly under the Board of Revenue. Patwari should be replaced by a Revenue Assistant recruited through Provincial Public Service Commission. Priority should be given to complete the computerisation of land records. Colonisation of Government Lands (Punjab) Act 1912 should be revised for better and transparent allocation and use of state land.

Strengthening Key Institutions of Governance

About a hundred key public sector institutions in the country such as PIA, WAPDA, OGDC, PEPCO, Pakistan Railways and Pakistan Steel, suffer from multiple problems—political interference, nepotism in appointments, over- manning, subsidised pricing, leakages, waste, and corruption. As a result, the budget has to allocate almost 20% of all tax revenue to meet recurring losses or subsidies to those corporations. There have been serious questions about the appointments of chief executives and the boards of these organisations. Professionalisation of these institutions is the only way out to make them financially viable and operationally efficient.

The process of appointments has to be made transparent and merit-based so that the Chief Executive or the Board member is chosen through a well laid out procedure. This process should minimise discretionary powers in appointments and attract capable candidates for these key jobs, which will make an enormous difference in the quality and efficiency of these organisations.

Several of these institutions are included in the government’s agenda for privatisation. It is imperative that these institutions are privatised sooner rather than later. For others that are retained in the public sector, and particularly public utilities and other monopolies, strong regulatory agencies should be put in place.

The selection process starts by identifying a broad pool of eligible candidates through open advertising. Only those who meet the job requirements are selected through a competitive process. They are provided with operational autonomy, paid competitive remuneration packages and held accountable for results. Special Selection Board (SSB) should be constituted for the recruitment of the Chief Executive Officers (CEOs) and the Board of Directors in all of these 100 institutions. The SSB, after interviewing the shortlisted candidates, would submit a panel of three candidates to the Prime Minister for selection as chief executive and recommend a panel of names for the membership of the BoD.

Institutions of Restraint

A few institutions can play a restraining influence on mis-governance and excessive discretionary powers by the government.

These fall into 2 categories: formal and informal.

Under formal are state-centred and civil society-centred.

Historically, the emphasis has been on state-centred institutions. Only recently have civil society-centred institutions such as the media and NGOs have begun to assert themselves.

Trust, social capital, and civic norms—the pillars of informal institutions have also eroded gradually in Pakistan during the last few decades. Mistrust, suspicion and divisiveness have instead taken hold. So in effect both the formal and informal institutions of restraint have decayed and need to be resuscitated.

A schematic representation of the institutions is provided in Table 1.

Among the state-centred institutions, the judiciary is higher than any other institution. It underpins the whole system of accountability.

In addition to the judiciary, there are at least 8 institutions that can make a difference.

The Parliamentary committees particularly the Public Accounts Committee.

Bipartisan committees chaired by respected and qualified MNAs or Senators and staffed by full time professional and technical personnel should hold regular hearings, confirm the appointments of those heading these institutions, receive annual reports of performance, question reported irregularities and recommend action against those found responsible for wrongdoings. All procurement contracts above a certain financial limit, all fiscal exemptions and concessions and modifications to the tax provisions should be placed before the PAC. The proceedings of these Committees should be open to the public and the media.

The State Bank of Pakistan

An independent and autonomous State Bank provides a guarantee against the excessive and irresponsible actions of politicians and bureaucrats in economic management.

At the same time its regulatory and supervision functions act as a safeguard against possible malpractices in the award of credit and recovery of loans.

There has already been significant improvement in the 176working of the State Bank since it was granted autonomy in the 1990s. The banking sector in Pakistan, after the reforms of the last decade, has emerged quite strong and was able to withstand domestic and external shocks.

Table 1: Institutions of Restraint in Pakistan

Spheres of Influence/Restraint

FORMAL

A. State-Centred JudiciaryProtection of Basic Human Rights, Security of Life and Property, Contract Enforcement Parliamentary Committees/ Accounts CommitteeAvoiding misuse and abuse of discretion powers of the Executive branch Auditor GeneralOmbudsmanDetecting and reporting of financial irregularities in public accounts Redressal of grievances of citizens against the excesses of public sector agencies Public Service CommissionTransparency in appointments and promotions to Civil services State Bank of PakistanProbity, supervision and regulation of the financial institutions Federal Election Commission Screening of candidates for the elected public offices on the basis of integrity Securities and Exchange Ensuring high standards of Corporate governance in publicly listed Commission companies National Accountability Bureau Curbing corruption and misuse of public office for private gains

B. Civil Society-Centred Media

Non-governmental Organisations Academic Institutions/Think Tanks Professional Organisations Investigating and reporting of instances of corrupt practices in the country Monitoring and advocacy of Governance issues and participation in delivery of social services Research and analysis of the performance of the state organs, media and NGOs Private Sector OrganisationsProviding inputs into a participatory decision making process Regulating code of ethics among the private sector Religious BodiesBuilding trust and harmony among various groups of society INFORMAL Trust

Social Capital Civic Norms

The Auditor General of Pakistan.

The constitutional protection given to the office of the AG has not been fully utilised in Pakistan to unearth and detect financial bungling rampant in public sector agencies. The extended time lapse between the occurrence of the financial irregularity and actual detection and reporting by the Auditors has improved in recent years. But the lack of professional expertise and lack of prioritisation among core and peripheral cases still mute the efficacy of this office.

AG organisation should be converted into a supreme audit institution with autonomy, resources and accountability to Parliament. The AG should commission third party audits by professional firms of repute, use the broader ‘value for money’ concept and enlarge its scope of activities to cover all major public sector commercial and industrial enterprises particularly WAPDA/KESC, Sui Northern/Southern, Railways, Steel Mill, OGDC, PIA, etc.

The Securities and Exchange Commission

Capital markets in Pakistan are very shallow and have not played an effective role in intermediation required in an emerging market. Corporate governance of the publicly listed companies is weak and dominated by major family shareholders with due regard to the right of minority shareholders. Insider trading is perceived to be widely rampant and disclosure of information standards is loosely enforced. The SEC needs operational autonomy, resources and skills to carry out its mandate.

The Federal/Provincial Public Service Commission.

Most of the current difficulties in governance have arisen due to the politicisation of the higher services in the post-1973 period. There is general recognition that the merit-based system of recruitment, appointments and promotions, served the nation better and the present sifarish based and buy-the-post system is causing havoc. The responsibilities for all recruitment and promotions should be reverted to the Commissions without exception. Only men and women of proven integrity and impeccable credentials should be appointed as Chairman and members of the Commission.

The Federal/Provincial Ombudsman

The fanfare with which these offices were established under the Zia-ul-Haq Government died down fairly quickly. They are now perceived to be grinding the same millstone as the rest of the bureaucracy. In fact, they can become an effective instrument for quick, fair 179and judicious redress of grievances of ordinary citizens against the arbitrary harassment of the overzealous or corrupt officials. There are very few people who are aware of the scope and mandate of this office and who have trust in the organisation. A proactive educational role, a demonstrative effect of its reach accompanied by selection of the right persons to the job can make it work.

The Federal Election Commission

A powerful, independent and assertive FEC can play a preventive role by careful screening, scrutiny and investigation of the candidates for all tiers of elected offices and disqualifying those who are ill reputed and of dubious character. They should forcefully enforce the criteria prescribed under the Constitution augmented by appropriate rules and regulations. This fundamental shift in the quality of our elected public officials would bring about a significant change in the overall structure of governance in the country.

The National Accountability Bureau (NAB).

The law establishing the Bureau was quite a significant measure in holding to account the corrupt and those who derive personal gains from public office. But the implementation of the law was selective and the Bureau soon lost its credibility and moral authority. The recent move to place the Bureau under the Ministry of Law is a step in the wrong direction. The Bureau or its successor organisation should be given complete operational and financial autonomy and protected from political interference. It is the fear of the Bureau that should act as a deterrent.

How can these Institutions of Restraint be Strengthened?

The various countervailing forces such as the parliament, judiciary, media and the civil society organisations should be independent.

There should be no presumption that any one entity whether it is the executive or the judiciary or the media or civil society will enjoy monopoly power or act as a self-righteous body of vigilance. It is the interaction of these various entities and balance between them which will generate the optimal results. Second, no new institutions are being proposed but only the revitalisation, revamping and reengineering of those already in existence under the constitution is being suggested. There is a common tendency and an easy way out for both national government and international donors to abandon the existing institutions and create new agencies which start out with a big bang but soon fall prey to the same whirlpool of inaction and ineptitude.

The reasons for failure are the same as those which explain the non-performance of existing institutions. Unless the underlying dynamics is set right the institutional morass will grow. The history of Pakistan is laden with the creation of a plethora of new institutions which have been given blurred mandates, inadequate resources, little operational autonomy and are never held accountable for results.

Finally, this proposal does not favour the periodic, swift, abrupt, highly visible and publicised, extra-institutional measures against recalcitrant officials which have been the norm in Pakistan since the 1958 screening of senior civil servants under Ayub Khan. The subsequent actions by successive governments resorting to the purge of 303 or 1500 civil servants paradoxically created greater insecurity, uncertainty and unpredictability which are the breeding grounds for increased corruption.

The approach advocated here is to create an environment whereby the acts of misdemeanour and malfeasance are exposed routinely, increased vigilance and scrutiny is exercised continuously, early detection, investigation and fixing of responsibility are carried out resolutely and disciplinary actions against those found guilty are taken promptly.

Such an environment would act as a more effective deterrent in curbing corrupt practices than creating many laws and anti-corruption agencies with enormous powers which are misused. This approach will not work if the federal and provincial investigation agencies are not organised on modern and professional lines.

It will also be difficult to implement it if the government does not do away with the widespread and mindless application of the Official Secrets Act which has encouraged opacity of decision-making by politicians and civil servants. Outside the matters of national defence and internal security, all decisions—particularly in matters of public finance, foreign trade, contract awards and allocation of other public resources—should be wholly transparent and made public liberally under the Freedom of Information Act.

These 8 pillars of good governance can together make the difference, provided:

(a) they are headed by widely respected, strong and competent managers of known integrity (we have many of them in the country)
(b) the terms of reference, responsibilities, functions and powers of these institutions are clearly defined
(c) there is no political interference in their working but at the same time they are held publicly accountable for their actions and the results
(d) they are providing adequate financial resources and professional staff of calibre
(e) they follow open and transparent procedures and processes.

To ensure non- partisan political support for these institutions their heads should be confirmed by the Parliamentary Committees. In this way, the changes in the government will not disrupt their smooth functioning.

Together, these eight pillars, if allowed to work effectively, will be able to plug in some of the conduits that lead to corrupt practices. The most difficult question to answer is: Who will bell the cat? Who has the courage to put these changes in place? Of course, an enlightened government that has a sense of history rather than sights fixed on the next election. Pakistan has not been fortunate in having such a government so far.

Conclusion

The story of Pakistan provides ample confirmation of the validity of theoretical literature and empirical evidence about governance in developing countries. The distinctive characteristics that dominate the Pakistani scene, are the elitist capture of the state, excessive centralisation of power by both the elected and military rulers, chronic political instability and until recently collusion between the power structures—the politicians, the Army and the judiciary. The conflicts that took place at times between these power structures were not rooted in benign balancing acts for the larger collective good of the society but assertion of the authority by different actors to advance their narrow interests.

Unlike other societies, the cost Pakistan had to pay for poor governance and institutional decay has been very high. The path ahead is clearly defined. The agenda for reforms has to be carved out in the light of historical experience, internationally established best practices and the various characteristics peculiar to the Pakistani situation. This can form a logical sequence to the Eighteenth Constitutional 182Amendment and the National Finance Commission Award of 2010. There is an urgent need to realise that only taking this reform agenda to its culmination point over the next five years can complete the value chain.