Monday, 9 December 2013

Costs of poor planning



The Planning commission is the apex body for making visions and plans for the future of the country as well as for coordinating the medium-term Macroeconomic framework. The vision and plans for the future gave all departments in all levels of government guidance and direction for policy making and planning in all aspects of the economy. The medium term macro framework defines the longer term resource base as well as guidelines for fiscal discipline and planning.

The planning process instills a certain discipline in government economic policymaking. Both these activities are based on a widespread consolation at all levels and hence the development of coherence and coordination in government. In conducting these activities, the planning process collectively identifies the opportunities and constraints for the coming period.

Sadly we lost the planning process and focused only on projects. In the early days, when the country was young with limited infrastructure and in a post war environment where aid was a newly developed phenomenon and socialism was in the air, our planning relied heavily on borrowing and developing infrastructure projects. There was a strict project appraisal and implementation process. Over time, various government departments felt that the discipline of planning which placed pressure on coordinating, research, sequencing, coherence to be too cumbersome. it was far easier to work in silos.

It was easier to push a policy on an ad-hoc basis. Besides every ministry looked good presenting a policy. Today we have a huge proliferation of policies often contradicting each other and confusing the regulatory structures while feeding legal suits. Most of the policies also tend to be transactional and giveaways and hence against the spirit of policymaking.

As planning processes weakened so did the project appraisal and implementation process. No longer did the departments want to concede to project appraisal and implementation norms. Without the planning process they felt gut feeling was enough! In addition politics was allowed to enter the planning process in the 70s providing further impetus to denuding the project appraisal and implementation processes. The result is that projects are approved without due diligence, seldom completed on time, frequently have large cost overruns, and focus on brick and mortar. Moreover project quality is poor and without focus on public service. In all cases there is no provision for maintenance after the completion of the projects.

The rush to make projects has destroyed public service delivery. Often current budgets do not even provide for the running of a completed project. Completed projects especially of a social and educational nature are severely underutilized. There is an inordinately high pressure to build roads contrary to appraisal norms. Gas and electricity grids are stretched way beyond efficiency evens at huge cost to the economy. Consequently, the realized gain from projects is far less than that which was originally envisaged.

The weaknesses in project appraisal and implementation mechanisms have weakened the impact of development spending. PIDE study shows that development spending has little or no impact n long run growth. A PC study shows that development spending has a short run impact if .07% on growth when development spending increases by 1%; in the long run there is no impact of increased development expenditures on growth. Moreover, it is suggested by data that further investment in roads has no positive impact of growth. Meanwhile, as argued in the Framework for Economic Growth (FEG) international evidence has shown conclusively that growth and development happens with good planning and development processes focused on developing quality public sector management, vibrant markets, creative cities with an emphasis in youth and community. The FEG laid out a comprehensive reform agenda that directed toward this development and estimated that this would lead to an increase in our annual growth rate to 7-8% from average of 3% for the last 5 years and this increase would be sustainable. Sadly, despite this evidence the push for projects continues and our leadership continues to labor under the impression that projects will lead to growth. While the FEG was approved by the NEC, at no time was it ever presented to the cabinet, the PM or the president while project meetings were frequently held.