Author Archives: Tim Wallace

Equipping Pakistani Business Associations for Effective Advocacy

In their latest Economic Reform Feature Service article, CIPE Pakistan Country Director Moin Fudda and Deputy Country Director Hammad Siddiqui look back at the impact of CIPE’s program in Pakistan from the opening of a CIPE field office in 2006.  At that time, business associations were ineffective organizations dominated by politics and personal interests.  CIPE’s first step was to work with the government in updating it laws concerning associations.  The new law, the Trade Organizations Ordinance, brought modern, democratic principles to govern associations.

Following up on the new law, CIPE began working with chambers and associations throughout Pakistan to comply with the new rules and to meet modern professional standards.  CIPE helped the boards and management understand their roles and responsibilities in running an association.  In addition, CIPE helped build the capacity of associations to work with their members to identify their reform priorities, and to advocate for those reforms to government officials.  From CIPE’s assistance, business associations in Pakistan are able to drive real reforms that improve the business climate in Paksitan. Read the rest of this article.

Article at a glance

  • Years of political upheaval and the lack of freedom of association in Pakistan has left business associations and chambers of commerce unable to influence economic policy decisions.
  • CIPE worked with chambers of commerce and business associations in order to strengthen their ability to advocate on behalf of private sector priorities.
  • Although work remains, this program has made a positive increase in the capacity of non-executive staff members and women’s chambers, and in policy reform efforts.

The military is not the answer

A typical street scene during 2009 in Colombo, Sri Lanka's largest city. (Photo: Biel Calderon via Flickr)

For more than 25 years, Sri Lanka had been consumed by an ongoing civil war. With the defeat of the Liberation Tigers of Tamil Eelam in 2009, Sri Lanka has turned its focus to governance and economic growth. Although the end of hostilities has brought relief, moving from war to peace has its own challenges.

One of those challenges is what to do with a military whose soldiers are no longer needed for the job they were recruited for. Sri Lanka has found plenty of tasks for them to do, everything from building bridges and houses to selling vegetables and operating an air-ticketing agency. The military can be a capable institution, but relying too heavily on the military can prevent the development of other institutions necessary for a healthy, functioning democracy. Whether its managing government services, or running businesses, turning to the military should be a last resort.

For many countries, the temptation to employ the army for roles beyond defense is too much to resist. Militaries tend to be highly structured and efficient organizations. In a country with few or weak institutions, the military is often the one institution seen as able to ‘get things done.’ But turning to the military to solve non-military problems can be perilous. Once the military starts taking on additional roles, it can be hard to stop.

Sri Lanka would be wise to study the role the military plays among its neighbors. With Bangladesh’s democratic government mired in corruption, the military stepped in to form a caretaker government in 2006. Although largely welcomed as a stabilizing force, the caretaker government was no better at overcoming Bangladesh’s challenges, and created problems of their own. According to the International Crisis Group:

In its first year in power, the government made some 440,000 arrests ostensibly linked to its anti-corruption drive, creating a climate of fear in the country. Its poor handling of the economy and natural disasters has aggravated underlying scepticism over its real intentions. The continued state of emergency and efforts to undermine popular politicians and split their parties have left many questioning its sincerity.

Elections were held in 2008 and Bangladesh returned to civilian rule. Bangladesh has regularly topped the list of most corrupt countries. Desperate for a solution, the caretaker government offered a glimmer of hope. Fighting corruption requires institutional changes that remove the incentives for corruption in the first place. The military proved capable at arresting anyone suspected of corruption, but was wholly unable to enact the institutional changes necessary.

Pakistan faces its own challenges with its military. Although no longer a military government, the military is still the dominant player, bringing in billions of dollars in foreign assistance, not to mention its vast businesses with $10 billion in assets. In total, Pakistan’s military businesses make up over 7 percent of GDP. But is the military contributing? In her book, “The Military Inc: Inside Pakistan’s Military Economy,” Dr. Ayesha Siddiqa Agha finds that many of the Pakistan military’s businesses are operating at a loss, propped up by the government. These businesses crowd out more legitimate private businesses and dry up resources that could be used more efficiently. But taking away support from an institution like the military is no easy task.

In many countries, the military is a highly respected institution, often viewed as bound by honor and above partisanship. When a country is facing challenges, it can be easy to look to the military to solve them. But tasking the military with duties beyond defense invites new challenges. Militaries are not designed for such tasks, and however well intentioned, they will likely fail.

Corruption in Afghanistan

As the conflict in Afghanistan has dragged on, concern has grown over the slow development of democratic governance in the country. Although some improvements have been made, public services remain inadequate. Government policies are lacking or, when put in place, often confusing or contradictory. And above all, corruption is pervasive and pernicious. Transparency International ranks Afghanistan 179th of 180 countries.

The Afghanistan Research and Evaluation Unit recently released a report on corruption in Afghanistan which raises some crucial issues in the efforts to build good governance in the country. The report is a qualitative report based on 400 individual interviews and 25 focus group discussions conducted throughout Afghanistan. It provides valuable insight in support of the quantitative surveys recently conducted including CIPE’s own Afghanistan Business Survey (see also this ABC poll).

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What Motivates Afghans to Vote?

The recent elections in Afghanistan have been the source of great consternation. Most recently, U.N. Deputy Special Representative for Afghanistan Peter Galbraith was relieved of his post over a disagreement on how to address corruption in the election. This week the Obama administration is reviewing its strategy in Afghanistan, brought on, in part, by the failures of the election. The media coverage of the Afghan elections focused on two things: the insurgency and corruption. The Taliban were outspoken in threatening those who would participate in the elections. In addition, many of the candidates were accused of various corruption and vote fraud practices.

What is often lost among the talk of recounts and run-off elections is the grassroots political development of the people of Afghanistan. The Afghanistan Research and Evaluation Unit (AREU) recently released a report that examines the political activity of average Afghans and the reasons behind their decision to vote. AREU looked in-depth at the voting behavior in three districts around Kabul. The results show that people had a wide-range of reasons for voting, and that their interests were primarily local. Among the more than 100 interviews, the Taliban was rarely mentioned. And although most were resigned to a Karzai victory, they were no less determined to vote.

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Tashabos: Entrepreneurship Education in Afghanistan

A few years ago I had the pleasure of serving as a Peace Corps volunteer in Uzbekistan. While the Uzbek people were incredibly generous and hospitable, the frustration and dismay over the crumbling economy was clearly evident. The breakup of the Soviet Union had disrupted trade and supply lines that threw the economy into chaos. Business declined and unemployment rose. There was little optimism and much resignation. Then I got to know a few local businessmen. To them, the situation was anything but bleak. They would talk endlessly about how easy it was to make money if you knew what you were doing. Business opportunities were abundant. They encouraged me to stay in Uzbekistan and start a business. They said I would be a fool to work anywhere else.

The dichotomy was shocking. It was amazing to me how just a little knowledge could so completely change the paradigm. What appeared to be a country with no business and no jobs to some was a wide open playing field with little competition to others. “If only everyone knew what these businessmen knew,” I thought.

Since joining CIPE two years ago, I have been working with our office in Afghanistan. One of our programs in Afghanistan is Tashabos – a youth entrepreneurship course taught in high schools. What started as a small pilot program has quickly spread throughout Kabul and into rural areas. The program has been a hit with students, their families, teachers, and with the Ministry of Education. The demand for the program has far outpaced our ability to expand it to new schools.

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Aid in Afghanistan

Anne Applebaum is not the first to criticize the rebuilding efforts in Afghanistan, just the latest. Her recent article in the Washington Post points out the shortcomings of aid programs in Afghanistan. She states that

This is a country in which all the best people are being hired away from the national government by the alphabet soup of aid agencies on the ground; in which the same aid agencies are driving up real estate and food prices; in which millions are squandered on dubious contractors, both local and foreign; in which the minister for rural development admits he doesn’t know what all of the NATO reconstruction teams in rural districts do; in which the top U.N. official, given a mandate to coordinate the donors, says the donors don’t respond to his attempts to coordinate them.

Ms. Applebaum raises the argument of Ashraf Ghani and Clare Lockhart, that

Well-meaning foreigners should not fix roads; they should teach the Afghan government to fix roads, thus helping it acquire legitimacy. Foreigners shouldn’t feed Afghans but, rather, develop Afghan agriculture so that the Afghans can feed themselves, export their surplus and develop a stake in the rule of law too.

Ms. Applebaum concludes her article with the advice that “For once, the solution lies not in greater funding but in more intelligent use of the massive resources available.”

Her point is well taken, but criticism of aid to Afghanistan (and foreign aid in general) is sometimes so broad as to be misguided just because the process is so complex. The effort to assist in the development of Afghanistan is massive and intricate, fraught with conflicting goals. Certainly some of the best people are being hired away from government to work in aid organizations. But once there, they might be gaining invaluable new skills and knowledge that will build local capacity. 

Foreign assistance funds can at times feed corruption. But blaming corruption on money alone is like blaming traffic congestion on cars. While technically accurate, we should be thinking beyond money and what really needs to be addressed (such as institutional deficiencies in the Afghan government) as a source of corruption and graft.

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Free Markets come to Libya

The last decade has been a turbulent one for the Islamic world. Dramatic events have shaken the region and dominated the headlines. One of the biggest changes, and also one of the quietest, has been the transformation in Libya, and Muammer Gaddafi specifically. Once the nemesis of the United States, Muammer Gaddafi has silently been evolving into a more open and moderate leader.

This week the Financial Times is reporting that Gaddafi is moving to initiate free-market reforms, pledging to amend laws to promote private enterprise and encourage international trade and economic cooperation. Gaddafi, whose government once controlled every aspect of Libyan society, is now playing a different tune. He said that government control inevitably leads to corruption and theft, and that the only solution is to allow the people to manage public funds. Admitting that in the short-run there might be chaos, Gaddafi said that such reforms were necessary.

I am excited for the people of Libya and this opportunity. I hope the transition goes well and that a strong business community will develop. The world will be keeping an eye on Libya’s progress. A stable and prosperous Libya would send a strong message to other countries on the virtues of private enterprise.

Secretary of State Condoleezza Rice will be visiting Libya in a few days which will mark a new era for relations between the countries. The U.S. should offer Libya whatever support they need and I hope Gaddafi will be willing to accept. Amidst the U.S. political party conventions, I hope the candidates can take a moment to recognize the trip and commit to supporting Libya’s continued transition to a free and open society.