: Mr. Daniyal Aziz started his political career as Member District Council. A former Chairman National Reconstruction Bureau (NRB) & Member National Assembly (MNA), and currently Chairman Board of Directors Devolution Trust for Community Empowerment (DTCE) he was invited to deliver a talk on the 23rd of November, 2009. He spoke on the subject of: Does Local Government have a future in Pakistan?
Mr. Aziz began his talk by providing a context to the formation of the NRB and development of the Local Government Ordinance (LGO 2001). Devolution & Decentralization was one of the seven point agenda articulated by General Musharraf as he assumed power on November 12, 1999 and NRB was created as a policy think tank to advice the government in fulfilling this agenda. An atmosphere also prevailed that Pakistan could be declared a ‘failed state’ because there were allegations of embezzlement in the health and education sector to the tune of $ 400 million. To break this vicious circle, it was decided to promote grass root democracy through local government and reduce reliance on the bureaucracy. Thus main objective of the NRB was to make local government functional and elected leadership at the local level more representative and responsible.
The task of designing such a reform involved four separate pillars including the administration, political, legal and financial. Following the study of various similar international experiences as well as reforms tried in the subcontinent, the district seemed the right administrative unit of analysis and action. Historically it had been a viable geographical entity with key attributes of language, culture, and socioeconomic activity. In terms of relationship between political and the administrative, the Principle of Subsidiary (any function that could be performed at a lower level would be inefficient at the higher level) was used. At the village level the Union Council had history of over 5,000 years and seemed the most natural organization. However, the costs establishing an administrative unit appeared too high. Thus Union Council was used as the basic political unit, which would vote both for the District and Tehsil Nazims linking together the political and the administrative units. Tehsil was made the unit of analysis and action for higher order municipal functions and its traditionally separate rural and urban management systems were merged into one.
In terms of administrative changes, the Divisional tier, which had been the principal arm of provincial bureaucracy with little oversight of elected representatives, was eliminated. Its functions were mostly devolved to the district level while in certain cases new positions were created. Though a coordination tier, it was insulated from elected representatives, from below through the tehsil and district level tiers and from above through the policy level tier (secretary, deputy secretary & section officers) and the attached departments & directorate tier. Additionally the Line departments, which ran from local to the provincial level for province wide planning and decision making were devolved and in certain cases multiple departmental positions were merged for improved performance at the district level. For example, the agriculture group at the district level was a merger of 12-15 different departments (Fishery, Livestock etc) allowing planning to maximize the co-potentialities of the district’s economy and the proper use of budget and technical skills under the direction and monitoring of the Nazim and the Council respectively.
For financial design, the Provincial Finance Commission (PFC) was instituted. The basic principle in designing jurisdictional hierarchies of government required that there were no un-funded mandates. The PFC substituted for lack of revenue generation providing the necessary funds according to a specific criterion, while each tier of the local government was given 1 major buoyant tax to generate revenue in the long term. Interestingly, Pakistan had been a case of extreme vertical fiscal imbalance—where federal government had much more revenue than its requirements while provincial and local governments had no revenue generation. Ideally, the local government should generate all its revenue.
“Pakistan had been a case of extreme vertical fiscal imbalance where federal government had much more revenue than its requirements while provincial and local governments had no revenue generation. ”
The LGO 2001 was radically different from all earlier local government laws in its approach and breadth. Before the mid 1970s when local government ordinance was introduced in an omnibus fashion, there had been bits and pieces of local government services in different laws. Then 1979 saw another round of omnibus ordinance. The LGO 2001 combed through and consolidated the various Line departments, development authorities and local governments responsible for the same municipal service into one. The legislation brought the administrative, financial and to some degree even the police functions, under the purview of the district level elected representatives.
“LGO 2001 combed through and consolidated the various Line departments, development authorities and local governments responsible for the same municipal service into one. ”
The design work in consultation with government departments culminated in a Local Government Proposed Plan, which came out as a Green Book on March 23, 2000 and was widely circulated, printed in newspapers and sent to political parties and government departments asking for their comments, suggestions and position on specific issues, thus initiating an open political process. Though feedback was received from various political parties including PPP, PML-N, Tehreek Insaaf, Jamaat-e-Islami and various civil society organizations, it was clear that political parties had not done any deep thinking on these issues as their responses showed a lack of technical skills or a communicable syntax. The consultative process continued till August 14, 2000 when the approved plan was announced with significant changes. For example, the Green Book had proposed direct elections for Tehsil and DistrictNazims; it is worth noting that despite these changes the plan was opposed by almost all political parties. Most political parties pleaded for indirect elections using every conceivable argument including high costs of elections.
It was then that the harder part of translating the plan into a legal instrument began leading to all the details – service interests, political angles, financial complexities including audit and account responsibilities, chart of classification, basis for the PFC formula and integration with ongoing PIFRA reforms. Unfortunately, it became trench warfare making it the hardest period of the whole process because it created the space to oppose the plan that had been proposed. After going through three rounds of iteration in combing through, understanding the logic and then applying suggestions from the consultative process among government departments, the process was considered complete. Then the bureaucracy was left with no constitutional or historical argument in opposing the LGO and began to debunk it as un-Islamic. NRB’s success in pushing through these changes in spite of bureaucracy’s resistance was possible only because the NRB had prepared and educated itself on the minute details, history, breadth & width, and the legal precedence.
Aziz argued that this process had positive externalities as younger public officers educated themselves in trying to defend the status quo, the whole country started thinking about governance and most importantly “the first step to solving a problem is to accept that there is a problem” was taken. Finally, the law was sent to the provinces as a model ordinance and minor modifications for a province were overseen by the governor. For example, Sindh had certain Hindu majority areas and thus the minorities’ complexion of the electoral part of the LGO needed to accommodate it. He agreed that ideally the Police order, the Cantonment Act and the Islamabad Capital Territory Act (despite, different construction, jurisdictions and histories) all should have been part of the LGO. He conceded that the NRB’s capacity was limited and more importantly the approval process was hierarchal, long and tedious.
In terms of what could have been done better, Aziz stated press and donor management; and that more effort should have been put in developing an understanding at a societal level for greater acceptance of the reform. He mentioned that sometimes unrelated problems, such as, inflation and devolution were linked to discredit LGO. For example, it was argued that removal of Magistrate had led to minimal check and balance, weakening the writ of the state on the market leading to inflation in common commodities. While the real issue was increase in money supply (increase of printed money), an outcome of loose monetary policy propagated by Mr. Shaukat Aziz (PM) & Dr. Ishrat Hussain (Governor State Bank) and anti money laundering measures restricting the Hundi system, forcing remittances to come through the banks. Rather than sterilizing it with higher interest rates, it was pushed through with low rates creating a financial bonanza for urban Pakistan increasing demand for goods and services (interest rate for buying a Suzuki car was 7.9%) while backup investment in agriculture did not keep pace (interest rate on farmer loans was 14%) to provide supplies. Coincidently a drought at the same time led to huge increase in food prices leading the political team to shift the blame on the NRB. In investigating the matter, it was discovered that laws pertaining to price controls were in place, monitoring of price list (Nirkhnama) was kept up, fines (challans) had gone up four folds and fine amounts eight folds. The difference between Sensitive Price Index (Market Observed Price) and the Nirkhnama (Market Stated Price) was about 50paisas on average on a weekly basis. Thus increase in food prices was not due to administrative weakness but because of economic and monetary policy leading to real increase in nominal prices. This was but one example of how an unrelated issue was used to discredit the Local Government System (LGS).
Aziz accepted that implementation could have been managed better. It was affected by the attack on the Indian Parliament leading to army monitoring teams being pulled from districts to the border even before the Implementation Phase 2 & 3, which included taxation, district ombudsman, police order and more. Additionally an interfering hostile provincial government wanted to use state auspices to create a political following but to their dismay the political technology had changed. He argued that had the government not given in to indirect elections and the elections had been clean, the centre of gravity of Pakistani politics would have shifted to the local level as heavy weights themselves would have run for District Nazim rather than nominating their relations leading to a changed relationship with the bureaucracy. Unfortunately it was quite clear that power that be while continuing to use LGO as a legitimacy tool, also wanted to maintain control if push came to shove.
Aziz argued that the intent of LGS was to change the political culture of the country, which had become corrosive to institutions including to the bureaucracy. Thus strong political reaction from provinces was expected and it was the very reason that new laws in the Six Schedule, constitutional changes including 140(a) and implementing article 175(3) dealing with separation of judiciary and the executive were put in place to give these changes time. This was the first time that the public had been able to judge an alternative to the existing system. The real change was the shifting of ownership of institutions to the democratic class at the local level, which had been NRB’s answer to get the political class to start behaving responsibly towards institutions rather than blaming the bureaucrats. Unfortunately taking responsibility for society was not something the political class had been trained for. Instead the last 200 years had groomed them in the system of patronage in return for loyalty. Thus they would find their way to the loyalty gravy train while the system lent credence to a dynastic loyalty based political party format with bureaucratic nodes doing both the political bidding as well as political management. An effective local democracy would require politicians to be judged by their service delivery performance rather than by their personal loyalty to the leader’s family thus threatening family fiefdom oriented dynastic mode of politics. Additionally it would enable creation of various democratic platforms and leaders within political parties at the local level, which would take on a political life of its own again threatening the loyalty based politics’ use of the top down bureaucratic system.
“An effective local democracy would require politicians to be judged by their service delivery performance rather than by their personal loyalty to the leader’s family thus threatening family fiefdom oriented dynastic mode of politics.”
He stated that LGO reform was not about the civil services but about empowering the people to take control of their destiny and to make their own decisions. He disagreed that it had adversely affected the provinces arguing that he considered the people of the provinces to represent the province rather than two and a half acres of the Civil Secretariat off of Mall Road, Lahore. Additionally he argued that most of the officers in the Provincial Civil Secretariat were federal officers, an outcome of the 1954 federalprovinces agreement on the sharing of posts. According to this agreement, the federal government was responsible for certain posts in the province including the Chief, Home, Finance and Planning Secretaries, the Inspector General (IG) Police and the Senior Board of Revenue among others. These officers were recruited and trained by the federal government while their management also resided with the federal government. Additionally a percentage of posts in grade 17-20 were also allocated to the federal government from the tehsil level up. Thus it was wrong to argue that devolution was anti provincial because it was the federal bureaucracy that had lost power to the elected representatives of the province. Given Pakistan had a unitary bureaucracy and a federal constitution, any movement towards a federal system was bound to affect the bureaucracy.
In answering a question on the future of Local Government, Aziz said that the Constitution through Article 140-A created the 3rd tier of government stating “Each province shall by law establish a local government and shall devolve its financials, administrative, political authority and responsibility to the elected representatives of the local government”. So any changes to the LGS had to be within this framework. The proposed laws drafted by the bureaucracy, approved by the provincial cabinets and sent to the federal governments would certainly be struck down as they centralized political, administrative and financial responsibility thus going against the spirit of the constitution. He stated that sources of opposition continued to emanate as the officer king model of governance where one man (Deputy Commissioner -DC) had the revenue, judicial, criminal justice and police authority in addition to being the executive head, was in the interest of the bureaucracy and the political family fiefdom mode of politics. He claimed that the District Management Group (DMG) was still striving to have judicial authority, so that indirectly it could bring the police under the executive. But the biggest hurdle in acquiring these Magisterial powers came from the movement of independent judiciary as Chief Minister’s sacking of a DC with magisterial powers would be akin to Musharraf sending the Chief Justice packing home. He stated that the case for Local Government was being fought on two fronts; first, the judicial as there were a number of cases pending in the courts challenging recent government acts including the Nizame- Adl Regulation recreating District Magistrates in Malakand Division, in the Peshawar High Court and Reinstatement of Commissioners in the Lahore High Court. Second, the reaction on the streets was for LGS as various elected local governments, some political parties, civil society, labor unions and chambers of commerce wanted a reasoned dialog in improving the LGS rather than throwing it all out. Additionally service rivalries were also playing a part as a section of the bureaucracy was also comfortable doing their technical jobs as Executive District Officers (EDO) without being under the yolk of DMG generalists. A new PCS Officer Federation had recently taken up the case against the 1993 changes when the government had increased the 1954 Federation’s job quota across the board. Lastly even lower cadre workers of parties in power who could never run for an MPA or MNA seat felt angry for not being able to aspire to run Tehsils or Districts.
“Each province shall by law establish a local government and shall devolve its financials, administrative, political authority and responsibility to the elected representatives of the local government.”
Answering a critique of the LGS implementation, Aziz argued that compared to other countries (Uganda, South Africa, and Indonesia), Pakistan comparatively had a soft landing in devolving an old entrenched system. Giving the example of PFC, he stated that a team in the provincial financial department went on a 3-4 days tour of each district to train officers in creating an integrated district budget for the much bigger fund receivable following devolution. This provincial training program was successful in creating a functional PFC where each Union Council received a cheque for their share of the provincial finance award, thus rationalizing and stabilizing a fiscal regime in the provinces as compared to the partisan politics’ adhocism which had led to 10,000 unfinished schemes, some beginning as early as 1975.
“The legally allocated 25% of all development funds to be spent only through CCBs, with unspent money to be carried forward was meant to incentivize the bureaucracy to move towards a participatory approach in the triangular relationship between elected representatives, bureaucracy and the public.”
In answering a question challenging that local elections had empowered people, arguing for an approach combining devolution plan and the rural support program, Daniyal Aziz stated that there was a difference between representative democracy and questioner’s ideal of participatory democracy, but argued that the Citizen Community Board (CCB) in the Devolution Plan was meant to include the participative aspect. The legally allocated 25% of all development funds to be spent only through CCBs, with unspent money to be carried forward was meant to incentivize the bureaucracy to move towards a participatory approach in the triangular relationship between elected representatives, bureaucracy and the public. But even local governments had resisted the participative aspect with Nazims wanting a centric view, not letting village councils to come about, or district councils and monitoring committees to have real power. But he was hopeful that the participative aspect would evolve as councilors learnt the ropes of the system. He argued that change took time and would not come about just by elections. In time examples would be created, leadership would emerge, eventually leading to the path towards change but most importantly an enabling environment had been created with the needed legislative structure. The Devolution Plan differed from the Rural Support Programs in trying to reform and work within the system using resources provided by the State rather than developing a parallel infrastructure. Thus it was much bigger in scale.
In closing, Mr Danyal Aziz while agreeing that promulgation of LGS would have been better if done by a democratically elected government pointed to various examples of implementation failures during representative governments. In terms of outcome, independent survey of perceptive indices of citizens had pointed to an improvement in service delivery since the time of LGS. But the more important story was that Pakistan’s political class was learning how to run the system rather than being completely dependent on the bureaucracy. He suggested direct elections for Nazims and instituting a District Civil Services to further strengthen the Local Government System.
“… the more important story was that Pakistan’s political class was learning how to run the system rather than being completely dependent on the bureaucracy.”