A Very Exciting Post about Grey-Suited Bureaucracy

Reorganizing the Civil Service is like drawing a knife through a bowl of marbles

Reorganizing the Civil Service is like drawing a knife through a bowl of marbles

Government is not a team. It is a loose confederation of warring tribes.

Sir Humphrey Appleby

The critics of the global aid architecture tend to focus a great deal of our ammunition on donors, and this fulfils a useful function. Donors do many things wrong collectively and individually; on the grand scale of their ambitions and in the minute details of specific programmes. They also have far more power than the average developing country Government and so are under less pressure to reform their practices. Of course, small and large NGOs are fodder for criticism concerning their venality and uselessness or their bizarre programmes in others while Governments come under a great deal of fire for their more exuberant violations of the social contract to which they are supposedly held.

In general criticism of Government tends to be of its role as a political entity. Equally worthy of thought is the functioning of Government as a bureaucratic structure. I’ve worked in civil services in a few countries now for varying stretches of time, and have deep reservations as to whether their structure in low-income countries is best suited to get the most out of any development expenditure, let alone aid.

I should make it clear that I believe that strong Government is central to the possibility of organised development (i.e. any process of economic transition that is managed to occur rapidly). This isn’t a universally accepted view, but my own inclination to look at historical development processes suggests that Governments are often central to development, whether through the affirmation and enforcement of property rights (as De Soto argues) or through active industrial policy (Chang). Their attempts do not always work, but the potential is there, provided they identify and execute their most appropriate role. The analysis that follows is a questioning of whether or not current structures help or hinder this.

Let’s leave aside for a moment the question of whether a particular Government is as an entity developmental or not. We’ll imagine a well-functioning democracy with a stable political base, capable of making difficult decisions but not so stable as to be a de facto autocracy. In a low-income African country, how would you structure this Government’s bureaucracy? Think about it for a moment, while I sketch what most developing country Finance Ministries actually look like, focusing on the policy side.

The Ministry is overseen as a political creature by the Minister of Finance; its technocratic brain is a Secretary to the Treasury. The political and technocratic masters of the Finance ministry oversee a bureaucracy that normally comprises of these elements: a budget department; an accountant general’s office, which manages the process of Government spending; a department for external finance; a tax and revenues department, which deals with the policy of taxation while collection is undertaken by a separate agency. Most countries will have some kind of macro-economic monitoring department. All will also have a national planning and strategy section. These are the departments that create Poverty Reduction Strategy Papers (PRSPs) and their successor documents. In some cases these will be a department in the Ministry of Finance and Economic Planning; in others it will be a separate Ministry of Economic Planning.

Instinctively, most of this seems to make sense. After all, it’s how most developed country Treasuries will be organised, though substituting the External Finance department with a foreign assistance department of some description, and with the addition of some further policy arms and perhaps a slightly finer sub-division of responsibilities. Yet, those of us who have spent significant stretches of time inside these developing bureaucracies quickly realise that this structure does not work.

To understand why, we need to consider briefly how the function and functioning of developing country bureaucracies differ from developed country civil services. There are two major structural differences that need to be understood:

  • Their medium term objectives are different. A developed country civil service aims at administering a working system as efficiently as possible. A developing country is normally still trying to create a system that is logical for its own structure and specific problems; efficiency gains must be pursued concurrently
  • As a result of their imperfectly specified system, there is more ambiguity in the role and function of each constituent part of developing country bureaucracy. This has two effects. Firstly, there is more likelihood of overlap of responsibility and action between departments and also more likelihood of areas that fall through the cracks between departments; secondly, there is likely to be increased competition for political space within the bureaucracy. Both of these exist also in developed country bureaucracies, but the consequences are lesser, and more readily apparent and dealt with when the system is better specified.

The major impact of these problems is that different departments within developing country bureaucracies become so preoccupied with developing and maintaining their own sphere of influence that their level of interaction tends to be minimal. What communication does exist is typically characterised by mutual antipathy. Budget departments do their work in isolation, emerging from the subterranean depths of their Excel spreadsheets to request information every once in a while. Planning departments produce strategies and plans without much discussion with either Tax and Revenues or External Finance. Tax departments produce new policies in close discussion with their Minister but rarely with the budget departments, let alone the separate Ministry of Trade and Industry.

The result is a deeply divided and inert structure. It makes it difficult to devise policy and even more difficult to implement it. Take for example, the national planning process. The Planning department will consult with colleagues inside and outside of Government to some extent, but will largely produce its plan internally. From this genesis, the plan may bear little relationship with the likely revenues available for its implementation, best known by the Tax and External Finance departments. Let’s suppose the plan is a good one despite this, and is accepted as the best way for this country to move forward.

The budget department now creates a budget, asking for discrete pieces of information here and there, but essentially working alone – without regular input of the writers of the plan which should be implemented through it or those agents in charge of managing donor resources, domestic borrowing or tax revenues. The resultant budget imperfectly reflects the national plan, particularly because that didn’t really reflect the resources available in the first place; beyond this, the budget will probably not capture all the likely aid inflows or even the domestic expenditures (and revenues) because communications with other departments have been weak. The budget is thus compromised as a planning and implementing document.

When someone then wants to change this situation, s/he discovers that it is virtually impossible to get all of the key players into a room together to discuss the issues, let alone to agree on how to reform them. There are political difficulties, as powerful civil servants seek to protect their domains, and simple inertia as those used to performing in a certain way are hesitant to change.

This is before we even get into the problem of staffing and motivation. Civil servants in developing countries tend to be woefully underpaid for the amount of work they’re expected to do, especially compared to what they would earn doing substantially similar jobs in better organised donor or NGO offices. Governments also tend to be understaffed, so to do their jobs effectively staff may need to also perform the other jobs that remain unfilled. The most common response to this is simply not to do things effectively. Obviously, there are exceptional people who work long hours for little reward because they care a great deal, and every Government I’ve worked with has one or two. But there’s only so much individuals can do when the structures need so much support.

Government structures need to respond to these difficulties. One solution may involve centralised decision-making and merger of departments. This would have the benefits of structurally linking related arms of a bureaucracy to ensure that they work together until their function is well enough defined to separate into divisions capable of specialisation. It would also unify leadership, to allow reform to continue faster. Though leadership under a Principal Secretary or Minister should in theory achieve this too, the reality is that such leaders are too remote from the trenches to know how the precise working habits have evolved.

The precise appearance of this newer structure would depend on the country in question, but as an example, tax and budget departments can be merged under one leadership (this is the structure in Her Majesty’s Treasury even now), as can planning and external finance departments. External finance must be contracted in line with national planning, which will normally be financed primarily from external sources – there are natural links. This approach would ideally be partnered by an attempt to monitor performance and hold leaders accountable for them, which in turn depends on information and central power at the level of the Principal Secretary.

There are, of course, drawbacks to this proposal. It would create much more powerful repositories of power within the civil service, which may well have unintended consequences. It also does not address all incentive and staffing problems. Still, it seems to be me to be a better idea than allowing stagnant systems to continue. But these are just preliminary ideas. I’d be interested to hear alternative views from anyone who has studied these organisational structures with more rigour.

2 thoughts on “A Very Exciting Post about Grey-Suited Bureaucracy

  1. Roving Bandit

    November 29, 2009 at 11:10am

    Sounds like a very convincing argument *against* Changsian industrial policy to me…

  2. Ranil Dissanayake

    November 30, 2009 at 5:55am

    Actually, I think it’s an argument against various kinds of reform under the current structure. The bureaucracy needs to be strengthened and reorganised. post-independence, there was a huge desire by the new leaders in almost all of Africa to replicate the most modern state bureaucracies, in many cases, without history of pre-colonial technocratic governance. Unsurprisingly, the structure doesn’t work that well.

    That’s not to say it can’t be made to work with a real and concerted effort, or that a different structure won’t work.

    I still believe Government needs to engage to create capitalism; but to do this successfully, it needs to reform itself.

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