Dr. Kamal Monnoo |
This government’s economic performance so far has been unimpressive. All hopes from a finance minister with supposedly an impressive track record in the corporate sector seem to be fading away fast. Policymaking, if any, has been slow and unsure, thereby creating an impression that the economic leadership was perhaps not prepared for this most important national job, meaning adequate homework that should have been done, while in-waiting, seems missing – As we know, in the economic and financial world perceptions can literally make or break endeavors! Despite calls from the finance minister and Prime Minister Khan himself that they should be given some more time and that very soon, if nothing else, (at least) a ‘new’ direction will be determined, the impatience amongst the Pakistani people and media is brewing with each passing day.
Trouble being that actual policymaking aside, one has thus far not even seen any innovative or out-of-the-box thinking on the economy, something that everyone was naturally expecting from a successful corporate guru, and something that could have helped to: inspire confidence; calm nerves of anxious stakeholders; and reduce the prevailing uncertainty in the markets. And then, of course, there is this big looming question these days of how sure is the PTI government itself of its own choice of the finance minister? For any leader to succeed, clarity in the authority matrix is essential. However, here we may have a situation where the finance minister himself faces an internal question mark on his abilities.
The important thing here is that the will and the resolve of governments to avoid traditional rigidity and instead adopt a forward thinking approach. For PTI also, there is no need to reinvent the wheel, but there is no time to waste either!
A rather large (hand-picked by the Prime Minister) Economic Advisory Council has been announced, which will “help” the finance minister in devising policies and taking key economic decisions, as if Mr. Asad Umar’s own competence to tackle the different facets of the economy is in doubt? Further, most of these advisors are mere academics with little practical knowledge or any hands-on experience – Any management expert will tell you that not only such large advisory bodies tend to be counterproductive by often causing confusion and delays, but also tend to be an impediment to serious, quick and bold decision making.
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Criticism aside, the thing is that for someone from a stellar corporate governance background one was expecting more concrete action in the first 60 days than just indulging in cheap rhetoric on non-issues like auctioning old governmental cars or selling state buffaloes or partially opening state houses to public viewing, etc. Any seriously minded executive will tell you that today nearly all thinking governments around the globe are busy trying to harness the potential of different but effective corporate partnership tools to spur development, growth, equity and employment generation in their respective economies.
One just somehow expected that under Mr. Umar such measures would also come quickly to light in Pakistan. He at least should know that gone are the simplistic days of overseeing commercial operations by bureaucratic managers and for investments to bear fruit in the modern era global economy they need to be managed through entrepreneurship and market principals. Pakistan’s continued failure to successfully manage its state-run enterprises (as against the UAE for example) bears testimony to this fact.
For any leader to succeed, clarity in the authority matrix is essential. However, here we may have a situation where the finance minister himself faces an internal question mark on his abilities.
Also, even the failure to perhaps optimize CPEC’s capital spend or the sheer lack of interest in public initiatives like raising funds for debt retirement, making dams, etc. can be attributed to the weakness of not placing such programs under a professional management structure. We have to date not seen formation of independent yet competent apex boards that when empowered combine state’s requirements with private sector’s entrepreneurial skills to professionally take control of such financial outlays and initiatives, and more importantly, to manage them strictly under the laid down principles of corporate governance. Like taxes, people do not want to part with their money unless they can be sure that it will be put to efficient use!
So really, what corporate initiatives could this new government have taken in its first 60 days? To start with the following two, as these are the two areas (as mentioned above) where most progressive governments are today already cooperating with businesses to evolve joint solutions for equitable national growth and job creation: First, Developing a joint strategy with the private sector to facilitate optimal usage of CSR (Corporate Social Responsibility).
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To readers familiar with this element, Carroll’s concept of CSR was in fact established as far back as the 1960s and still remains the most widely cited literature on the subject. Carroll presents CSR as a multi-layered concept consisting of four interrelated issues: economic, legal, ethical, and philanthropic.
While the legal context presumes that the business is operating under the prescribed laws and regulations that apply to its industry, the ethical context, admittedly, a gray area, refers to how businesses behave according to acceptable social norms that often go above and beyond the legal and regulatory requirements, the philanthropic or discretionary relates to a company’s voluntary roles and activities in society, it is the economic context which is of key importance, as it refers to governmental policymaking in a way that helps in ensuring that CSR in fact ultimately ends up aiding the business’s primary responsibility of producing goods and services that society wants, and selling them at a profit.
He at least should know that gone are the simplistic days of overseeing commercial operations by bureaucratic managers and for investments to bear fruit in the modern era global economy they need to be managed through entrepreneurship and market principals.
A good recent example of how governments can strategize with businesses to unleash CSR in a way that focuses on the bottom of the pyramid is that of Sub-Saharan Africa where fundamentally the needs for profitability with social concerns were balanced in a way that manifested itself in observable and measureable behavior, output and corporate financial returns. And the results from 2012 (when the new CSR policies were initiated) to 2017 have been phenomenal. Companies and especially the MNCs (Multinational Corporations) have not only since preferred to increase their spend on CSR consistently by 300% (on average) per year during this period, but have also opted to increase their share of new investment capital outlays (previously being either retained or repatriated) in the resource constrained countries of sub-Saharan Africa.
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Second corporate policy that PTI should quickly formulate and implement relates to developing a cognitive framework of facilitating cum unleashing High-Growth Entrepreneurs in Pakistan – After all it has promised to create 10 million jobs by 2023! There is a growing evidence that certain types of entrepreneurs matter more than others when it comes to promoting long-term economic growth, because they launch and lead companies with above-average impact in terms of job and wealth creation.
Understanding the characteristics of these entrepreneurs, spotting them and then facilitating them has been of primary focus of the countries, which endeavor to move to the ‘next’ level of development and progress. Again, a good model to study or even emulate would that be of Brazil where the country’s policymakers developed programs and policies to support such individuals to in-turn support Brazil to improve its economic growth and employment generation. The important thing here is that the will and the resolve of governments to avoid traditional rigidity and instead adopt a forward thinking approach. For PTI also, there is no need to reinvent the wheel, but there is no time to waste either!
Dr. Kamal Monnoo is a political analyst, he can be reached at firstname.lastname@example.org. The views expressed in this article are author’s own and do not necessarily reflect the editorial policy of Global Village Space.