Slapping The Wrist That Feeds You

Slapping the wrist that feeds you

Tuesday, September 01, 2009
by Mosharraf Zaidi

This past week, the government of Pakistan decided to tell the American government and its foreign aid arm, USAID, to cut down on administrative costs in the execution of its development programmes (development programmes that happen to be financed by American taxpayers). Perhaps this is the kind of stand-up Pakistani machismo that Pakistan’s hyper-nationalists have in mind when they plea, on a weekly basis, for more backbone on the Pakistani side, in the ever complex US-Pakistan relationship. Shouting down the next visiting US diplomat for how USAID operates might be sexy for the old school folks at the GHQ, but like so many other things at the GHQ, it would be borne of the lethal cocktail of naivete, ignorance and arrogance that tend to be in such large supply there. Unfortunately for Pakistan, no matter what inspires these outbursts, these kinds of statements represent little more than Imtiazian theatrics. Pakistan is not underdeveloped because of foreign aid and its inherent contradictions and inefficiencies. It is underdeveloped because of Pakistan’s own inherent contradictions, and believe it or not, because of Pakistan’s own inefficiencies.

Highlighting Pakistan’s very flimsy case on the issue of how to spend development assistance in Pakistan is not a defence of the indefensible. The World Bank, USAID, the DFID, the entire UN system, the European Union and a host of smaller bilateral agencies make plenty of mistakes in their stated quest to assist Pakistan’s development. In some cases, such as that of the Americans, the mistakes are rooted in the very DNA of why these agencies are in Pakistan at all. It is no secret that high levels of aid in the post-9/11 world are not primarily about the well-being of Pakistani people. But it should also not be a secret that agencies that are in Pakistan, spending billions of dollars of their money in this country, are here at Pakistan’s invitation, and in more recent times, at Pakistan’s stuttering, slobbering, and salivating insistence. It is not merely ironic for the government to be slapping American wrists over administrative expenditure. It is downright moronic.

Beyond the Imtiazian theatrics, the availability of the kinds of funds that are available — aside from legitimate questions about how relatively cheap Pakistan is — represents a tremendous opportunity for the Pakistani state and citizen. While citizens do their part and more everyday, the Pakistani state, as always, fails itself, its people, and its ‘friends’ — both real and imagined.

Pakistan is in no position to tell any of the ‘Friends of Pakistan’, or the aesthetically more nauseating construct of the ‘Friends of Democratic Pakistan’, how to conduct the business of developing Pakistan. This is because Pakistan has ceded the authority to do so. It has ceded the technical authority, the fiscal authority and the moral authority to dictate the terms of development assistance in very specific ways over many years.

First, it has ceded the technical authority to tell the Americans or anyone else about administrative efficiency, because it does not know what administrative efficiency is. This is not mere hyperbole. The auditor-general of Pakistan, as the supreme and statutory financial oversight office of the country, is supposed to have a bird’s eye view of the country’s finances. In the old days, when being a civil servant meant something more than being a cheerleader for a cadre-specific set of interests, the auditor-general’s office had teeth and it knew how to bite.

Today dozens of publicly-owned organisations, with pretences of being independent and autonomous firms, operate outside the bounds of the authority of the auditor-general. In a nutshell, they spend taxpayer money with absolutely no instrument of accountability to the taxpayer. At the very top of this list is the Pakistan Poverty Alleviation Fund (PPAF). A government that doesn’t even know where all of its money comes from and goes — and that is what a weakened auditor-general function leads to — can’t possibly know what administrative efficiency is, what to say of holding anyone to account for it.

Second, Pakistan has ceded the fiscal authority to speak of efficiency, because it has no money. This explains the longest begging streak in Pakistani governance history. It explains some of the great whoppers of the Haqqani-era of Pakistani spin in DC, my personal favourite being Ambassador Awesome’s swipe at the Obama administration for bailouts for ‘some failed insurance company or some car company whose achievement is that they couldn’t make cars that they could sell’, while not ponying up money for Pakistan. Beggars really can’t be choosers, even when they hold a gun to their head and threaten to shoot. Pakistan cannot ask for money with one hand, and slap the wrist that feeds it, with the other. It has no fiscal authority to do so.

Finally, Pakistan has ceded the moral authority to speak of administrative efficiency. Pakistan is incapable of administrative efficiency itself. Recurring (or current) to development (or investment) expenditure ratios in Pakistan are horrifying, even after the wide liberties the country takes in defining development expenditure. The country’s ability to utilise development expenditure is even more horrifying, and it often fails to spend more than half of what it allocates to development. Year after year, when donors have taken the plunge and invested in budgetary support for the country, they have been bitten, twice, sometimes three times. Pakistan almost always fails to live up to the terms of the loans and grants that it receives directly into the federal consolidated fund. Donors don’t publicise these failures of course, because they are not only Pakistani failures. They are failures for the unimaginative bureaucrats that work for donors. (Disclosure: I know from experience, having myself worked for donors, in various capacities, throughout my career).

With no authority to speak on administrative efficiency, why would the Pakistani government choose to become Imtiazian? Why would it choose drama over substance in the development discourse?

That’s easy. When it comes to a substantive discussion about development in Pakistan, the Pakistani government has little substance to talk about. The most important discussions about development issues in the country take place outside government, often with little impact on formal policy. There’s a sex-ed debate raging in Karachi, a clean water and sanitation debate in Faisalabad, a vivid urban space utilisation debate underway in Lahore, and lots of verbiage around community-based development in Gilgit. Indeed, there is no shortage of rich debates about development issues in Pakistan. Just none that involve the government. That, more than any other piece of evidence, should impress upon us how deep the dysfunction of the Pakistani state truly is.

For this state to turn around, with its manifest inability to hold a single coherent discussion about the issues most important to the future of its people, and blame donors for the manner in which they administer their support, is the icing on the cake. That’s slapping the wrist that feeds you.


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  2. Publius

    Dear Sir:

    I completely agree with your point re. PPAF — institution that has no accountability. PPAF, among other things, provides funding to different Microfinance Institutions and Banks. However, PPAF lacking accountability as it is, is throwing away the taxpayers’ money and no one is taking notice about it. This nation needs to wake up!

    Recently, one of the projects that PPAF is funding is facing a mass social rebellion all over Pakistan — this point can be independently confirmed from Pakistan Microfinance Network. The name of the organization is Kashf Foundation whose portfolio of Rs. 3.5 Billion is completely gone as only around 9000 clients out of 320,000 are making any payment on their microloans. The portfolio at risk (PAR) is 97% and it is beyond 90 days late — technically it’s lost.

    Still, PPAF recently provided this illiquid organization with a loan of Rs. 2 Billion. All this moeny is also going to go down the toilet or the directors of Kashf Foundation are going to take it home as some people at Kashf are making around Rs.1,500,000 per month (yes, this is Rs. 1.5 million per month). There should have been a proper assessment of this organization’s ability to payback the loan. There hasn’t been one.

    I have been told that the head honcho of Kashf and the CEO of PPAF enjoy a deep frienship and that is why this money was given to them.

    There should be some accountability of this organization as it is wasting the hard earned money of this country’s citizens.


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