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Reinventing Government for Economic Revitalisation

It is in the 'enlightened self-interest' of the political leadership to ensure that the government faces effectively the rapidly growing internal pressures from a more demanding electorate — an electorate that will not only create new demands on the political leadership but is bound to create new opportunities for the leadership to serve the public.

by Owaise Saadat
DURING the last 50 years, the score card of the state in promoting economic development has been rather mixed While governments have been relatively effective in delivering substantial improvements in education and health, they have generally failed in areas such as managing public enterprises and in formulating and implementing economic policies. No matter how the score card looks, there is a f'eneral consensus that an elective state — one that plays a catalytic, facilitating role, encouraging the activities of the (irivate sector —is a necessity or ensuring sustainable economic development. In fact, of late, the need for creating an efficient state has gained a new urgency because of the enormous social and economic challenges imposed upon governments by the ongoing globalisation and the rising expecta tlons from its citizens.
Wlille there is much debate, the experience of successful reforming countries has confirmed the clear lesson that without initiating broad-based public sector management reforms (PSMR) the implementation of key economic policies simply remains a desired goal. For instance, how often does one come across rigid bureaucratic rules which prevent the sale or divestiture of public enterprises? How often does one sees foreign and domestic investors failing to take advantage of an attractive investment policy because of the glacial speed at which official approvals come by? How frequently does one find that legislation meant to create space for private investment is actually unimplementable because of the maze of bureaucratic regulation? And, how often do incompetent and corrupt civil servants exercise unfettered dis-
cretionary authority adding to the cost of doing business', forcing foreign investors to seek alternative destinations for their capital?
Moving Slowly but Surely
The answers to all the foregoing questions would only reaffirm the importance of putting PSMR at the centrestage of any programme of economic revitalisation. So one may ask, why have governments been reluctant to initiate institutional reforms? The answer lies in the fact that reforming or reinventing the public sector is an extremely difficult and long drawn out process. Institutional reform more often involves wrenching changes in the way government agencies think and act and at times entails an overhaul of the Tong established system of patronage and corruption.’ Thus, bringing about such reforms is almost akin to moving mountains, and making dominoes that will set all others to fall. The single-most potent force which can make such changes occur is unwavering political commitment and support from a broad-based coalition of proreformers both within government and other civil society members. But, as seen from the successful implementation of state reforms in countries like UK, New Zealand. Argentina and Malaysia, the key factor is political will. Had it not been for the bold and visionary leadership of political leaders like Margaret Thatcher, Menem and Mahathir Mohammed, their countries would not have achieved the long lasting changes in the way governments conduct business.
Five Strategies
Before discussing the key reform strategies, one must admit that given the enormous range of differences between
states, the country conditions and culture, there is no cookie cutter' approach for developing a public sector reform programme. Each country's reform programme has to be home-grown in that it must be based on a deep knowledge of the bureaucratic system, civil service culture, arrangements for accountability etc. Fortunately, a year ago the Bank undertook in collaboration with local experts and practitioners, an indepth study of Bangladesh’s public sector management practices. The resulting study known as Government That Works (GTW) contains a timebound reform programme along with a five-part strategy to achieve these reforms efficiently.
For the purpose of this article, the lessons drawn from the GTW study are fitted into a typology of governmental reform developed in a recent book by the authors of the internationally acclaimed work on Reinventing Government. In this book, the authors consider a public system akin to a living organism, they argue that by altering the genetic code or DNA of the public system organism, lasting changes can be achieved in the shape and behaviour of the state. To achieve this, governments must adopt the following five strategies known as the five Cs.
The Core Strategy
This strategy is at the heart of public sector reforms and questions the very purpose of a government's role: what was termed in the GTW study as the
why government? It is a well-known fact that the fast growing demands imposed by the development process on governments have resulted in them giving up their steering function' and concentrating more and more on 'rowing' the boat of the state. As a matter of fact, until recently, most developing countries, particularly those with a socialist orientation, considered it their responsibility to not only formulate policies and to proride public goods like health and education, but run airlines, build and operate cement factories, steel industries. even bakeries. While applying the core strategy, the GTW study concluded that the Government in Bangladesh was also clearly 'over-extended'. For instance, it needs to get out of the business of doing business, and confine itself to performing its core functions, namely, provision of law and order. Even in the case of social sectors like education and health, the government needs to play a supportive role while relying on the private sector. NGOs and other civil society institutions to actually deliver the services. These institutions have been found to be better suited to delivering services at the community level. Thus, the challenge for political leaders is to rethink and redefine the functions of government based on a 'minimalist' role for the public sector.
The Competitive Strategy
Any customer of DESA, Biman WASA or Titas Gas knows the captivating power of a
monopoly public utility/service organisation. There is almost no competitive pressure for improving service and the consumer is virtually at the mercy of public officials'. Alternatively, cellular phone users have begun to reap the fruits of a competitive market as seen by the sudden drop in prices. The first and most important step for the policy makers, is to expose the public sector enterprises to competition, but the salutary effect of competitive pressures works equally well in reshaping the civil service. Institutional economics clearly teaches one key important lesson: incentives and penalties are the most effective lever of change. Regrettably, most traditional bureaucratic systems firovide employees with power-ul incentives to follow the rules and keep their heads down; innovation can only bring trouble, the status quo brings steady rewards. And, since employees are paid the same regardless of the results they produce, there is no incentive to innovate and increase efficiency. The GTW study made concrete proposals to introduce the competitive element in a civil service recruitment system based on merit not favoritism; linking promotions to performance and productivity rather than seniority, and ensuring adequate compensation for work done.
The Consequence Strategy
The next fundamental piece of DNA engineering relates to changing the basis of accountability i.e. by asking to whom
are the key public sector organisations and their officials accountable? In theory, most are accountable to elected officials who create them, determine their functions, and fund them. But in practice government organisations are rarely fully accountable to elected officials. This is because of two reasons: one. because these officials are under constant pressure to respond to the demands of interest groups, they often care more about where public resources are spent than about the results they purchase. And secondly, the oversight committees in the parliaments are still in an evolutionary stage. More importantly, legislators do not always have the resources (human and material) to carry out their review functions adequately. While the GTW study strongly advocated strengthening the key accountability institutions such as the Parliament and the Auditor General Office, it recognised that the most potent force could be the accountability of public officials to the public they are expected to serve. In the' UK. the legislators have successfully prescribed a 'Citizens Charter' which clearly sets up performance standards for public enterprises and utilities. These standards are carefully monitored. and aggrieved citizens compensated, when services do not meet stated standards.
The Control Strategy
In the Bangladesh’s public sector, effective authority is supposed to first flow from citizens to elected officials; and
then from elected officials to central 'staff agencies such as budget and personnel offices. In practice, however, authority remains concentrated at the top bureaucratic levels. Therefore, the fourth critical area of reform measures proposed by the GTW study is to alter the very center of decision-making power in government. The strategy to achieve this is to 'give people a voice', bringing the hitherto disempowered poor and marginalised populace into the very centre of the government's policy-making process and service delivery system. With this objective in mind, the GTW study prepared case-studies on 'good practice' within relatively successful public sector programmes like the PKSF microcredit scheme, the mass immunisation program, and the relatively robust performance of the Rural Electrification Board.
The Culture Strategy
The last critical strategy is to forcefully attack the basis of bureaucratic culture — i.e. the way public organisations operate and interface with those they are actually meant to
While changing the values. norms, attitudes, and expectations of employees is the most challenging and difficult task in reforming government, the GTW study concluded that if Bangladesh is to achieve its stated growth targets, it would have to rewrite the genetic code that has shaped the culture of its civil service. The GTW study contains three approaches to reshape this culture: develop new habits by giving people new experiences, new kinds of work and interactions with new people.
Above all. farsighted political leaders will need to make
the benefits of reform clear to all, and they will need to build coalitions that attack t,he culture of keeping the lid on information. In short, an open government is an efficient government — thus, repealing the 1925 Officials Secret Act would be a first step towards good government!
Conclusion
One can imagine some readers saying at this point that, 'the five strategies of reforms seem sensible, but will never work in the political context of Bangladesh since the risks far outweigh the benefits'. They are most likely to ask. the benefits of reform are abstract and in the future, while the political costs are real and to be borne today, so why should our political leaders take the leap of faith?
The answer is simple because the cost of doing nothing will mean lower growth, continued poverty, social unrest and citizens continuing to receive less for more. It is therefore, in the 'enlightened selfinterest' of the political leadership to ensure that the government faces effectively the rapidly growing internal pressures from a more demanding electorate - an electorate that will not only create new demands on the political leadership but is bound to create new opportunities for the leadership to serve the public. In this sense the choice for the 21st Century is within the grasp of the political leadership and it is entirely up to them how they choose the course of the country's economic revitalisation programme!!
Th^ author is a senior staff member of World Bank mission in Bangladesh