111 510 510 libonline@riphah.edu.pk Contact

Beyond the charter of economy

The Charter of Economy is perceived as a minimum agenda to be agreed to by political parties, despite different ideologies. The thought process is that such a charter can somehow shield the economy from the vagaries of political swings. This is indeed a noble thought. However, it may be an uphill task to follow through, considering this would essentially mean that all political parties contest elections on a common manifesto.

Institutional memory is vital in government. A thorough attempt to come up with a kind of Charter of Economy was made by the PML-N and PPP in 2009, which I was honoured to support in putting together. A comprehensive document covering all areas was compiled after due deliberations, which is available on the shelves of the Finance Division. Some commentators, less familiar with the functioning of the government, may not fully appreciate the extent of policy work undertaken over the years within the government and by development partners. Many reports and policy papers within the government ministries, planning commission as well as in the public domain can form part of a revised Charter of Economy.

As an example, let us consider the documents put forth in the agriculture sector alone, to get a sense. A pioneering study was initiated by the government in 2017 for the rice sector. It took two years to analyze the whole value chain, starting at farm-level production, processing, storage, value addition and marketing. In a similar manner, useful work was compiled by a committee of experts at the Planning Commission in 2018 for repairing the cotton sector, providing recommendations, some of which can be considered for implementation. A comprehensive document in the shape of National Food Security Policy was also developed in 2018 to reinvigorate the agriculture sector.

In February 2020, the Planning Commission published a Cluster Development Based Agricultural Transformation Plan-Vision 2025 for 33 agriculture commodities. The tasks for the short-term are clearly defined and prioritized in this plan. An agriculture Emergency Program was also put together in 2020 envisaging work through 18 Public Sector Development Program projects.

It is quite unfortunate that, despite all these documents, Pakistan has one of the lowest crop yields in the region, its agricultural marketing system is underdeveloped, and the sector remains vulnerable to climate risk and pest attacks. The intent of highlighting this record is to merely give a glimpse of the extent of work awaiting execution. Of course, the quality of work can always be upgraded and improved through peer reviews. Additionally, there is work by NGOs, INGOs, multilaterals along with reform and growth strategies by development practitioners.

This plethora of work can be used to forge yet another agenda (Charter of Economy) if so desired. Amalgamation is the easier part. Shaping it into actionable points is the more useful and grueling task as that alone will provide a way forward for the necessary changes in the economy.

Pakistan’s success in policy and structural reform has generally been through a more focused approach. Let us review this approach where a dedicated team of smart men and women, not a committee or commission, has been assembled with an outcome of some worthwhile results in the country.

Let me give two examples of work I have undertaken in Pakistan. In 2012, we initiated serious work on Ease of Doing Business (EODB) reforms in Pakistan. The modus operandi was a focused team along with key stakeholders to conduct diagnostics, forge an actionable plan and follow through with quantifiable results. It took several grueling years of research and a new report took the form of the first ever National Doing Business Reform Strategy 2016.

We followed our work by inviting the first ever data challenge mission of the World Bank to Pakistan for engaging directly with contributors and to get the most accurate statistics on Pakistan. At the Economic Reform Unit (ERU) we were aware that multiple business-related reforms were not being adequately captured by the EODB report. For the first time, Pakistan was recognized as one of the Top Ten reformers of the world in the 2017 publication of the World Bank Ease of Doing Business Report. Additionally, the country’s ranking was upgraded by four notches. This was no meagre feat. Pakistan had been on a downward slide for several years, hurting its image internationally as a destination for investment.

In a similar vein back in 2011, my colleagues and I at the ERU had realized that the government did not have a handle on the number, financial performance and share holdings of State Owned Enterprises (SOEs). A small but nimble team was energized, considering the broad scope of the task at hand. We published in 2013 the first ever report of around 203 SOEs which the Government of Pakistan supported or regulated or had some stakes in.

Our insight has created a country wide realization of the high level of inefficiencies, sizable financial losses and unbearable burden on the exchequer created by SOEs. In follow-up reports we highlighted the need to move on restructuring and divestment. In the first example one was able to show tangible results and in the second build a strong narrative by putting evidence on the table. The point that the two examples demonstrate is that a focused approach can work in Pakistan to bring about a change, through a dedicated team bypassing a clogged system.

There are other examples of success in various fields with a similar approach: bypass surgery. Building the insurmountable nuclear deterrence, to a decent income support programme, to a new motorway police, to digital data sets and deregulation of the telecom sector, are some worthwhile areas.

The Pakistan of today is fighting an existential economic task much beyond the purview of a necessary programme supported by the IMF. It is strongly proposed that on the same lines of bypass surgery, the country dedicates resources and a small team of sensible experts to oversee an agriculture sector turnaround, an energy sector revamp and further deregulation of the economy with a focus on small- and medium-sized businesses.

Desirables in these three sectors can be articulated. Focus in agriculture should be clear: to raise productivity and reduce cost, adjust to climate change and shift from grain to fruits and vegetables. The energy sector is challenging the country’s solvency with both its overbearing effect on the fiscal as well as balance of payments. The necessary surgery has to involve efficiency gains through divestment and a change in the energy mix of the country. On the regulatory side we can strive to further do away with overlapping regulation between local, provincial and federal levels. As we move to digitize and automate processes our focus would be on the bulk of businesses – the 5.2 million SMEs in the country.

Niche reform outfits like the ERU which I had set up in the government are independent, small hired hearts tasked to give informed policy advice following through the changes required on a periodic basis. It is time we believed that ideas of all-encompassing institutional reforms have been much less successful. We have to be deeply wise to move with a focused and objective execution.

One is reminded of an Elvis song: ‘a little less conversation, a little more action”.

Email: khaqanhnajeeb@ gmail.com

Dr Khaqan Hassan Najeeb, "Beyond the charter of economy," The News. 2022-09-11.
Keywords: Political science , Political issues , Political parties , Political swings , Institutional reforms , Pakistan , ERU , SOEs , EoDB