Will anti-corruption drive deliver economic gains?
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A few days back, the media and analysts discussed why Pakistan had slipped by four points on the global corruption perceptions index — a development which took place despite the recognition that the government, National Accountability Bureau and other institutions such as the Public Accounts Committee have done a decent job.
Instead of questioning the credibility of the Transparency International ranking, it is high time the government realized that local and foreign stakeholders in Pakistan’s economy look at this index with keen interest.
We learn from economic theory and practice that corruption impacts a country’s economic growth by enhancing income and consumption inequalities, inefficiencies in service delivery by public sector, and negative perceptions of business climate in the eyes of foreign and local investors.
In addition to this, literature on corruption and macroeconomy inform us that if corrupt practices in a society become predictable, this then forms a permanent part of overall costs faced by businesses, which they in turn pass on to the consumers. On the other hand, if corruption is unpredictable, it simply discourages innovation and investment by the private sector.
The above mentioned is well established in analyses by local think tanks as well. For example, a recent report by Sustainable Development Policy Institute (SDPI) on the quality of foreign capital in Pakistan highlights how the incidence of corruption prevents a level playing field for businesses, and micro and small enterprises find it impossible to grow in such an environment.
The way forward for the government, perhaps, would be to look at this international corruption index with a lens to study how perceptions about Pakistan improve through legislative, policy, regulatory, and enforcement reforms. Additionally, deeper thinking is required with regard to how perceptions about Pakistan’s economy can be improved in the eyes of investors.
COVID-19 may also have contributed to institutions bypassing usual procurement and oversight rules. It is important that such instances should not become precedents that would be resorted to in the future when the health crisis is over.
Dr. Vaqar Ahmed
The indicator that requires the most attention, according to the index, is the rule of law. While this is not a revelation, it would be important to understand if and how political will or institutional capabilities may be a hinderance to improving Pakistan’s ranking.
The government and its various taskforces on institutional reform may also like to look at countries whose ranking has improved and what measures they had adopted. These countries include Afghanistan, Ecuador, Greece, and Myanmar — all of them facing very challenging political economy yet showing signs of reduced corruption.
COVID-19 may also have contributed to institutions bypassing usual procurement and oversight rules. It is important that such instances should not become precedents that would be resorted to in the future when the health crisis is over.
Social accountability efforts across the country have been hampered by an excessive regulation of non-profit organizations working at the community level. Several such recent regulations or compliance requirements are not even available online. Across the globe, civil society organizations have demonstrated success in keeping a check on promises of elected representatives and ensuring timely and quality service delivery. In Pakistan, however, arbitrary checks that community-based or self-help organizations face now, discourage demand-side accountability.
The role of the media is critical in empowering and educating citizens with regard to how they can become partners in government-led efforts to strengthen the rule of law. Unfortunately, given the weaknesses of school and college curricula, even the most basic avenues for grievance redressal available to those being approached for bribes are not known to citizens — a key knowledge gap which media can bridge. Social messaging targeting undesired behaviors of public office holders can go a long way in creating awareness.
A post-pandemic economic recovery will be contingent upon revival of business interest. The government's Pakistan Regulatory Modernization Initiative (PRMI) should closely look into ways through which investor interest could be insulated from corrupt elements in regulatory institutions at the national and sub-national level. One way to do this is to expedite the drive to deliver all forms of registration, renewals, permits, and licenses online. Any fee or tax payments in the process should also be through online means. The human interface seen during tax audits faced by businesses could also be minimized through digital means.
This discussion here was part of the Pakistan Tehreek-e-Insaf manifesto to a large extent. The ongoing anti-corruption drive will receive appreciation if it brings about fair, transparent, and competitive markets and if citizens see follow-ups to graft investigations in the sugar, oil, and wheat sectors.
– Dr. Vaqar Ahmed is an economist and former civil servant.
He tweets @vaqarahmed
