Wednesday, September 3, 2014

IS ECONOMIC PLANNINGA FUTILE ENDEVOUR?



Two weeks ago from atop Kampala’s roof Professor Brian van Arkadie held sway over a meeting of the Oxford & Cambridge Society if Uganda.

The subject was “A perspective on economic planning in Sub-Saharan Africa” and the venue was the hilltop residence of the bank of Uganda governor Emmanuel Tumusime-Mutebile’s official residence – from that height Kampala looks like a forest.

Van Arkadie, a former chief planning economist in Uganda just after independence was uniquely qualified to speak on the subject. His experience as a planner in Kenya and Tanzania as well as Vietnam and the Baltic states, just before the fall of the iron curtain, allows him an interesting perspective on what it takes to plan economies from the ground up.

I came away from his talk, which was laden with anecdotes from his time advising this or that government, with two thoughts; one, a reaffirmation of the thinking that all economic plans have to take into account the political context in which they are situated. That it’s all very nice to want take off like Dubai or gallop like Singapore, but their economic trajectories had a lot to do with their political environment which do not mirror our own.

The second thing was the “revelation” that Uganda has had three and not two national development plans – 1962 and 1966 . The first and least known was one drawn up in 1946 by Edgar Barton Worthington, whose other publications are listed as “The ecological century” and “Science in Africa”.

Van Arkadie said that apart from being an obscure document --- long serving finance ministry officials have only heard about it, the 1946 plan was unique for two other reasons; it was drawn up by a scientist and secondly, it was the only plan that worked. Van Arakdie supposed that it worked because the colonial government was essentially dictatorial and could ram through such components of the plan as the creation of the Uganda Development Corporation and Owen Falls Dam, with next to no sensitivity to the local politics.

Van Arkadie’s humility was therefore understandable. He would probably be the first to admit that after decades of planning economies, the one thing he has learnt is that the best laid plans of mice and men often go awry.

His criticism of the World Bank and not the International Monetary Fund (IMF) was also telling. Of the former he had no kind words, criticising their development plans, some of which he had seen copied-and-pasted from one country to the next. The IMF, which insists on stabilising economic environments as an anchor for future progress he said, was the right thing to do however painful.
So what then did he think was the role of the government in planning economies? He thought macroeconomic stability and strategic planning would be a government’s key functions.

Macro-economic planning where holding inflation down, containing budget deficits and ensuring a current account balance were critical for anything meaningful to be planned into the future. Strategic planning would inform strategic interventions to change or shift away from current situations by tweaking the fundamentals, so for example Uganda’s decision in the 1990s to shift away from state control to a liberalised economy.

And finally he counselled that whereas speed is desirable there are somethings that cannot be speeded up but are crucial for the long term health of economies. The civil service for instance, he suggested would take at least 40 years before it matured into its full role as an effective enabler of the economy.

Despite the shortcomings planning has a role to play in a rapidly changing and democratic world, but while there is a need to have long term goals, the means by which these will be achieved will need to be flexible to keep up with an environment that is ever in a state of flux.

Lee Kuan Yew in his book “From third world to first: The Singapore story” could serve as the real life example for Van Arkadie’s talk. When Lee Kuan Yew and his counterparts took over the helm of Singapore’s politics they had one strategic goal in mind, to see their own citizens within 50 years, enjoy a UK standard of living.

How they did it, often having to eject old thinking, change course, suffer numerous reversals and even face down real threats to the small island’s very existence, is a study in how a nation by keeping its eye on the ball can reach can lift itself from the direst of circumstances.

However a nation can have a compelling long term vision but is let down by the soft infrastructure, things like common commitment, diligence, transparency and accountability.

It would be easy to keep hope alive if one knew that a better standard of living was the natural end point of a development process, and that while some people may take 25, 50 or even 100 years the end is guaranteed. But it is not.

Nature tends to revert to a disorderliness, in the absence of external stimuli to order it.

So while planning may seem futile in as far as nations cannot get exactly what they want, it provides direction for the energy of the various players and improves the chances of success,  because as they say failing to plan is planning to fail.

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