The global setting reflects the need to consider the international market implications of domestic development policy. We tried to ignore these in the pre 1977 period and what happened to domestic production, consumption, income growth, distribution, employment and balance of payments is well known and recorded. Economic growth Economists today refer to development as a [...]

The Sunday Times Sri Lanka

5 Point Plan and the 10 Point Agreement


The global setting reflects the need to consider the international market implications of domestic development policy. We tried to ignore these in the pre 1977 period and what happened to domestic production, consumption, income growth, distribution, employment and balance of payments is well known and recorded.

Proposed Colombo Port City

Economic growth
Economists today refer to development as a process of ‘inclusive growth’ which contains all the indicators connected to growth. Growth itself is a result of investment and productivity. But for growth to become ‘inclusive’ it must produce better education, health, housing etc. What is important to note, however, is that this is not a ‘one directional’ relationship but a mutually reinforcing one. Economic growth not only provides opportunity for better education, health, employment, etc but is also symbiotically influenced by them. Such a symbiosis exists also among the various elements of development such as between education and health, which reinforces each other. What it suggests is that these symbiotic relationships must be taken into account in determining development policy and implementation systems.

Development in a market-based economy (the opposite is the Soviet type, state owned system, which is now history) is the result of a partnership involving the State, Private Sector and Civil Society. The effectiveness (development impact) of that partnership is determined by the promotional outcome of the principles of ‘good governance’. It is a popular saying that ‘the private sector is the engine of growth but the government is the engine driver’. As the engine driver, it is primarily the government’s responsibility to ensure the application of the principles (or rules) of good governance.

Accordingly, the principles of good governance emerge not merely as ethical or moral concepts but as technical imperatives of development. The technical effects of good governance on development become obvious when we examine the role of each principle.

Any partnership is based on a mutual understanding of common goals. A collective vision therefore lays the foundation for an effective partnership. A vision is not a dream or wishful thinking as usually contained in political manifestos. Yet, political manifestos subjected to SWOT analysis could provide the basis for a viable vision.*

A collective vision cannot be formulated by a group of experts only. It must be the result of an intensive dialogue involving all stakeholders. It should not be couched in mere ideological terminology or obscure economic theory; nor is it a mere set of numbers. It is a vivid idealised description of a desired outcome of collective effort that inspires, energises and helps stakeholders to create a mental picture of the targets to be achieved.

It is the prelude to a long term Perspective Plan, like our own 10 Year Plan (1959), which provides the basis for a series of Medium Term (normally five year) plans, usually broken down to Annual Plans, preferably on a ‘rolling plan’ basis. The advantage of a collective vision is that it provides a long term perspective of opportunities and challenges to businessmen as well as the people. It is useful particularly where long gestation investments are needed. A credible ‘development vision’ becomes a powerful tool in attracting meaningful foreign direct investment.

Malaysia produced one of the best known long term visions (Vision 2020) in 1991 which guided its development policies right throughout the years, helping it to get closer to developed country status. Korea started its march towards development guided by long term economic goals. Currently, it is guided by its vision 2025. A common characteristic of all these exercises (Malaysian and the Korean) is the position given to science and technology and human resource development.

There is a lot one could learn from these visionary outlooks and plans. We have to be cautious, however, in trying to adopt any particular model of development, whether it is the Malaysian, Korean, Singaporean, German or even Soviet, or Chinese models, for they have grown up under very different socio-economic and political conditions with deep historical roots. Lessons could be learnt, nevertheless, from individual sectoral achievements, such as in the case of the development of human resources, technology, as well as physical infrastructure.

A collective vision takes shape only when there is equity. This is not equality per say but equality of opportunity, the opposite of discrimination. Discrimination is not only morally wrong but also deprives a country of the benefits of participation and competition. It is competition that brings forth the best in people and organisations. Once you remove competition the incentive for better performance is lost. The strength of capitalism lies in competition which drives businesses to improve the quality of their products, lower costs, explore new technologies, train and motivate workers and raise labour productivity. Where discrimination sets in providing patronage to a select group, the result is crony capitalism, which is corrosive, corrupt and repressive.

Discrimination due to social differences- ethnic, religious or cultural- is equally corrosive. It affects not only those who are alienated but also the country as a whole through loss of national productivity. Where alienation has deep rooted historical reasons and requires concerted long term intervention, there is a case for affirmative action, at least as a short term measure, as in the case of the estate population in Sri Lanka. The problems of the people in the North, and some districts of the East, can be traced mostly to the armed conflict. Separatism or even near separatism through unrealistic devolution, as advocated by certain political groups, could only exacerbate the situation by prolonging suspicion, fear and even new armed conflicts. The answer lies in ‘inclusive development’ through partnerships based on the fundamental principles of good governance.

A segment of the population which requires affirmative action, particularly in a developing country context, is poor women and quite often middle class women. Discrimination against women has deep rooted historical reasons and cultural practices. The 10 Point Agreement refers to women and children’s rights “and adds that measures need to be taken to ensure women’s social, economic and cultural rights and also to empower them and that laws need to be formulated in accordance to the United Nations Pledge on the elimination of discrimination against women”

Affirmative action, unfortunately, depends often on men’s perception. Women have a weak voice because of relatively poor education and political power; even though, ironically, they make a significant contribution to development. In Sri Lanka, they contribute heavily to export earnings by engaging in estate agriculture, garment manufacture and also as migrant labour. It is also noteworthy that they handle most of the school and pre-school education. What is sadly ignored is the role they play in managing families, a creation of value which never enters the calculation of GDP. Civil society organisations in Sri Lanka have highlighted some of the basic issues but the political voice of women is muted due to poor representation in Parliament and other state assemblies. The remedy appears to lie in the reduction of fear of political violence by enforcing good governance.

Transparency is the bedrock of equity. Where information on government policies, rules, regulations and procedures are available only to a favoured group there is room for corruption and crony capitalism. Insider trading, restricted tender board information, advanced information on impending financial policy made available to a few favoured parties are examples of corrupt practices.

The proposed Right to Information Act (RTI), if passed by Parliament will have a significant impact on transparency of government policy and implementation. In section 2 of the Draft Act, it states that, subject to provisions of section 5, “every person shall have a right of access to official information which is in the possession, custody or control of a public authority.” Section 8 specifies the type of information, which covers, interalia, particulars relating to the organisation, functions, activities and duties of the Ministry, powers, duties and functions of officers and employees, rules, regulations, instructions, manuals, as well as facilities available to citizens. These are details that could be easily covered in the various institutional websites. However, even where websites have been established, they are rarely updated. A central authority such as the Ministry of Public Administration should take to task government institutions that do not update information.

A major issue that has prevented the enactment of the RTI in Parliament is the controversy regarding the exemptions list covered under section 5, which precludes information that “would constitute an invasion of personal privacy”, “cause serious harm to the defence of the state, its territorial integrity or national security, cause serious danger to life or safety of any person and would be or is likely to be seriously prejudicial to Sri Lanka’s relations with any state or international organisations, where such information was given by or obtained from such State or international organisation, in confidence.” Similarly there are exemptions in regard to premature information relating to exchange rate, banking regulation, taxation as well as prices and wages policies.*

The complexity of enacting legislation giving right to information to the citizenry is so complex that India took nine years to complete the process, finally in 2005. But it was the result of a relentless struggle spearheaded by civil society organisations. Even after enactment there were various attempts to dilute it, the government going to the extent of engaging a British consultancy firm to produce learned reports. One of the arguments put forward was that the bureaucracy was already overburdened with work, an argument supported by a sizable segment of senior government officials that it is not possible to comply with some of the requirements of producing information. It has been reported that there were even death threats used to intimidate certain civil society activists in order to weaken the provisions of the Act. It is, however, implemented now without much hindrance and has become a powerful tool of enforcing discipline in government spending and curbing corruption. *

There is a link connecting accountability, transparency, predictability, participation, equity and finally productivity. The OECD Code of Ethics says that public servants should be accountable for their actions, to their superiors and to the public, for compliance with rules, regulations and procedures. In the new approaches to public administration they have to be accountable for results and outcomes of their actions.

The principal aim of accountability systems is to prevent corruption-the abuse of public office for personal gain. Corruption has many corrosive effects on development. It adds to costs, which has to be borne by the people. It also discourages investment because of the additional financial burden. Corruption also mis-allocates talent, for rent seeking activity becomes more lucrative than productive activity. It also leads to mis-allocation of resources particularly foreign aid and foreign private investment.

Accountability in respect of the use of public funds (finances) is clearly laid down in the form of Parliamentary allocations through the Annual Budget and the system of reporting through the Treasury to the Public Accounts Committee. Ministries and Departments are not permitted to exceed the expenditure limits set out in the Budget, neither are they allowed to switch expenditure. However, they have often recourse to ‘supplementary estimates’, which weakens the principle of public accountability, even though one might argue that it is proper practice in terms of the Constitution. Supplementary estimates are not fully debated, rushed through Parliament and alters the originally agreed parameters of the Budget. A further shortcoming is that the Public Accounts Committee rarely meets and its deliberations are often a formality, especially with the new practice of a governing party MP chairing the meetings. Even though the Committee on Public Enterprises (COPE) has been meeting more often, the question is how much of the decisions have been implemented.

Secretaries of ministries are often referred to as ‘Chief Accounting Officers’. The question is, how ‘independent’ are they to perform that function? Can they deviate from the parochial political interests of the ministers under whom they serve? They are firstly, expected to function “subject to the direction and control of his Minister, exercise supervision over the departments of government and other institutions in charge of the Minister” (19th Amendment, section 52(2).)In the 1946 Constitution, the Permanent Secretary exercised such supervision “subject to the general direction and control of his Minister.” In the 1972 Constitution, the word “general” was deleted. “General direction” relates to matters of policy only.

Further, “the Secretary to a Ministry shall cease to hold office upon the dissolution of the Cabinet of Ministers….” 5, tying further the fortunes of his office to that of the Minister. This encourages Secretaries to acquiesce in the violation of rules and regulations proposed by a Minister. Further, what is generally observed is that the majority of the current Secretaries do not have the requisite knowledge and intellectual capacity to stand up to a Minister when attempts are made to violate accountability.

It is generally believed that the proposed Audit Commission and the Audit Service, however, could help Secretaries and Heads of Departments to play their role as Chief Accounting Officers and custodians of accountability. Yet, there is a danger that an ‘overkill audit system’ could rob government institutions of the benefit of innovative practices, pushing heads of institutions to play safe. This is a universally observed phenomenon, as Lou Winnick of the Ford Foundation, observed in the US: “In government all of the incentive is in the direction of not making mistakes. You can have 99 successes and nobody notices, and one mistake and you are dead.” *

Predictability assumes that laws, rules, regulations, procedures and policy decisions, once adopted, are followed diligently. To change these in midstream is like shifting the goal post in a soccer match when play is in progress, in order to influence the outcome. Predictability is based on the cardinal principle of the Rule of Law, which means that decisions made by government are not arbitrary, instead are founded on well defined rights and duties. It also means that rules are applied without exception, unless predetermined and made transparent. Where rules appear to be inappropriate to changing situations, their annulment or amendment must be decided ex-ante, providing sufficient time for private decision makers and stakeholders to adjust their plans. Failure to do so has often resulted in costly litigation.

Consider, for instance, the award of a government tender, which is later quashed by the courts because proper procedures have not been followed. Far worse are situations where tenders have been received, processed and decisions taken, only to discover that the terms of reference are not consonant with the objectives of the project, as result of which fresh tenders have to be called. The question arises who compensates the bidding firms for the expenses incurred in preparing the bids.

It is important, to appreciate that a predictable regulatory framework is crucial for firms to calculate the expected return on investment. On the other hand, uncertainty regarding the application of regulations raises the cost of capital by increasing the risk of investment. Investors need to be assured that bidding processes are fair and free from undue political influence, bureaucratic discretion or serious negligence. It means that results of public bidding must be honoured and implemented.

Predictability is important also where citizens are concerned. They must know that the law would be applied to everyone equally. Consider the situation where an ordinary citizen has to go to a police station to lodge a complaint. He would be well advised to get an introduction from an influential politician to be taken seriously by the relevant officers. Failure to do so could result in having to meet counter charges from the opposite party who has better political influence. Even where political intervention is not required to sell a point of view, one could still be at the mercy of cynical police officers who may not care about a citizens’ right to save time.

Productivity could be viewed both as a principle, as well as, an outcome of good governance. There are two sides to productivity- efficiency and effectiveness. Efficiency reflects doing a job within an expected time frame at relatively low cost, while effectiveness reflects doing it appropriately, with optimum outcome. Productivity is extremely important where there is a lack of capital and an investment constraint. While skills, technology, management, leadership and motivation are essential factors of efficiency, productivity also means rational decision making with regard to the choice of investment. You could build a school with utmost efficiency but if there are no students and teachers, it becomes a waste of limited resources. Wrong investment decisions are often the result of parochial political interests, which made one time Soviet Prime Minister, Nikita Sergevich Khrushchev to remark that “politicians are good at building bridges, where there are no rivers.”

A good decision- making process is a fundamental outcome of good governance. It is the foundation of development.

There is often a tendency to mix desired outcomes (development indicators) with outputs, activities and inputs. This is obvious when you look at all the political party manifestos. The UNF Manifesto proposes a “5 point plan”, suggesting such a mixture.
A political party manifesto, even the best written, cannot be implemented without going through the discipline of a planning process. There is enough experience in the developing countries from which one could learn how successful plans could be drawn up and implemented effectively. The most accepted approach, in simple terms, is suggested by the methodology that is popularly known as management for development results (MFDR). The process starts with defining the desired outcomes, precisely in the form of Key Performance Indicators (KPI), which are then worked backwards through identification of the related outputs, activities and inputs. The process, however, takes the form of an iterative exercise, reworking KPI in line with available inputs, possible activities and outputs. All the desired outcomes in the Manifesto will have to be put through this process. Planning, however, is not complete without an arrangement for progress monitoring and impact assessment. The planning process is complete only when the impact assessment provides a feedback for midterm adjustments and future planning.

(Lloyd Fernando is a veteran administrator who served in several ministries in the 1980s and was a former Secretary . These are extracts of a paper presented this week at a roundtable discussion organised by Marga Institute. The * (asterisk) denotes references he has used in preparing this paper.
He could be reached at

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