What does and doesn’t pass for reform?

Two stories this past week were supposed to be celebrated by Pakistanis that are thirsting for reform. The first was the news that the cabinet has approved the hiring of foreign consulting firms without the burden of PPRA rules.

The second was that 25 officers of the Inland Revenue Service and Customs Group working in the Federal Bureau of Revenue were ‘fired’ for being “incompetent” and “compromised”. Should serious people celebrate these news items? The reader should decide based on a little background.

Let’s take the hiring of foreign consulting firms absent PPRA rules. One of the most vexing problems governments face everywhere is the challenge of finding the right talent, skills and experience at precisely the right time, for the right purpose, and then providing such talent, skills and experience, the support they need to deliver for their country.

In countries where there are low barriers to innovation, like in Singapore or Estonia, finding the right people and putting them on the job is intrinsic to both the political culture and to how government works – what we might call administrative or bureaucratic culture. Those cultures did not emerge from the blue; they were put in place as part of a national vision and elite leadership that merged purpose-level aspirations with figuring out the analytics and pathways that needed fixing.

Intricate analytics and details are most important in places where people get things done. This is often lost in places where articulating the same principles over and over and over again causes the ecosystem to shower rewards upon those that master the rhetorical expression of the need for reform.

In other places, where barriers to innovation are substantial, the solution is often to apply a high degree of political and administrative will to solve the problem. Indeed, this is what we have seen in places like Saudi Arabia, under Vision 2030, and in places like India, under the leadership of a narratively coherent Narendra Modi. The brute force of high-level politics can help achieve great heights for some systems – but it is half-baked and incomplete to think that this brute force is merely a topline articulation of reform intentions. If any part of a system fails to deliver, what then?

In Saudi Arabia and India (and indeed many rapid-transformation environments), then people pay the price – some will lose their jobs, some will never be promoted again, some contracts will be cancelled, and some folks will suffer reputational damage that will restrict the flow of professional opportunity in their direction. Conversely, if you end up achieving an ambitious target for a reformist regime, you are rewarded handsomely. This could be in terms of money, or positions, or prestige, or public acknowledgement – but accountability is inescapable in a high-achieving environment. You fail, you feel pain. You succeed, you feel joy.

These first principles are important to internalize if you are invested in reform in any country, but especially if you are responsible for reform in Pakistan. The high-level reasons are all well-known – and we don’t want to fall into the trap of repeating rhetorical expressions of the need for reform. So, let’s restate the first principles again and then proceed to examine some of the reform news from this past week.

First, the articulation of reform must be clear and high-level political and administrative will for reform is essential. Second, the analytics for the what and how of reform must be clear. Intricate details of how things need to change is important, and knowing how things currently are is a crucial first step to mapping those intricate details and pathways. Third, accountability is inescapable. These first principles cannot be disaggregated and treated in isolation. You cannot have one without having the other two. You cannot have two without having the third. All three must exist, simultaneously. They must be seen to exist. They must be adhered to reasonably consistently.

What this means is that you cannot just articulate: ‘we are committed to reform’ and then expect the system to figure out what reforms are needed. Once you figure out what reforms are needed, you cannot just expect that the analytics and critical paths mapped out will be followed. There has to be accountability. If the pathways are followed, you must reward the people, processes, and organizations that deliver, and if they are not followed, or there is failure, then you have to act to hold those individuals, groups and systems to account for the failure.

If you are allergic to any part of this three-pronged formula for reform – articulation, analytics, accountability – you will not change anything. Indeed, you will most likely end up making things worse.

The news that the federal government had ‘finally’ decided to create a special allowance for foreign consulting firms to be hired by the government is news but is not new. Every incoming government has tried a variation of this. The earliest evidence I could find of this is a notification from the Management Services Wing of the Establishment Division dated January 25, 2002, and amended July 27, 2002 titled: ‘Guidelines for Appointment of Consultants’. I am sure there is even more evidence further back.

Think back and try to remember any government in your lifetime that has argued against privatization of loss-making state-owned enterprises, or argued against the need for improved local governance, or against the need to attract more foreign direct investment, or the need to dramatically increase exports, or the need to fix the fiscal deficit, or the need to increase revenue, or the need to bring retailers, agriculture and real estate into the tax net. If it all sounds familiar it is because it is. Pakistani elites have mastered the ‘articulation’ of the language of ‘reform’. The SIFC’s formation was a recognition that a system-wide bypass was required to do any of these things – and the starting point, for good reasons, was the focus of the authorities on bringing in ‘investment’ into Pakistan.

So, will the government’s new resolve to hire foreign consulting firms work? The short answer is that it is very unlikely. The reason is simple: the solution does not follow the problem. The principal problem that the government has is its inability to make decisions that synthesize the right information at the right time for the right purpose. The proposed foreign consulting firm solution (a solution that I and many other consultants stand to gain from) will not solve this principal problem. Why?

The Supreme Court of Pakistan has made two judgments over the last decade and a half that have substantially reduced the effectiveness of government (and government decision-making) to even less than what it was in the late 1990s. The first was the Hajj Scandal case in which the Supreme Court seems to have disallowed the appointment of anyone except an active civil servant from one of the civil service occupational groups, under the retirement age, as the principal accounting officer of a division or ministry. This stipulation means that the ultimate decision-maker in any process of government is a civil servant, and it means that the specialist skills required in negotiating, for example, the price of Pakistani assets during a privatisation or divestment process, are simply not available to the government of Pakistan.

The second was the Mustafa Impex case, that essentially cut off the head of government, and forced the cabinet to become a forum for muddled and faux decision-making – reducing the stature of the PM office, the cabinet itself, and thereby effectively enhancing the invisible powers of the same principal accounting officers – in appropriations, approvals and decision-making. Cabinet meetings for the last decade or so have become theatres of the absurd, with federal secretaries often occupying much more power and powerful positions than even the most seasoned members of cabinet. Yet year after year, after year, governments can’t do the very basic things that governments have claimed they want to do for over a quarter century.

This brings us to the arbitrary and unhinged decision to place 25 IRS and Customs Group officers from FBR on the Officer on Special Duty (OSD) list. Does any serious person believe that placing people on OSD is a genuine reform? Is there any doubt that most (if not all) of the officers placed on OSD will be back in key positions across government sooner or later? Can any foreign consulting firm possibly navigate the rivalries and competitiveness within occupational groups, and the bitterness that the other occupational groups have toward the PAS?

Can the SIFC deliver in an ecosystem where reform comprises two dozen FBR officers being made OSD and foreign consulting firms being spared PPRA rules? Don’t forget: articulation, analytics and accountability.

The writer is an analyst and commentator.