Looking back ‘another lost decade’ of Sri Lanka: We cannot afford another

Wednesday, 23 September 2020 00:33 -     - {{hitsCtrl.values.hits}}

We now have a new Government led by President Gotabaya Rajapaksa. There is expectation among citizens that their economic dreams will be delivered by the new Government – Pic by Shehan Gunasekara 


  • A decade on same governance challenges still exist – highlighting core issues from an article written by me in 2009 

I was reading the article on good governance written by W.A. Wijewardane on Daily FT few days back and was reflecting on all the important and interesting points he was highlighting on governance. My mind took me back to 2009, when Lal Nanayakkara, a former President of CA Sri Lanka (ICASL then) requested me to write an article for their 50th anniversary publication. 

At that time (2009), I was working in Malaysia and I was admiring the development that country had achieved. With the end of the war, I thought Sri Lanka should aim to achieve what Malaysia was then (2009) by 2020. My dream was for Sri Lanka to experience a period of accelerated economic development. I am confident all Sri Lankans had similar or even better dreams for their country when the war was over in 2009. 

My article to the CA Sri Lanka publication was on challenges facing the accounting profession and it focused on the role of the accounting profession in a rapidly developing economic environment. I don’t intend to discuss the role of the accounting profession in the last decade in this article, but wish to share, build and reiterate my thoughts on governance challenges I highlighted in my article in 2009. 

Prior to August 2020, we had two post-war governments. Although, each made some progress with regard to economic development during the decade they governed, in my view the dreams I and most Sri Lankans had in 2009 have not been realised by the end of the last decade (in 2009 Sri Lanka had a per capita GDP of $ 2,800, while Malaysia was around $ 8,000. In 2019, our per capita GDP was $ 4,000). Whilst there could be many reasons for our slow economic progress in the last decade, one key reason is definitely the challenges faced with (good) governance. 

The dream I personally had for Sri Lanka by 2020 can be challenged as highly optimistic, but I am confident proper focus, planning, consistent policies, appropriate funding and good governance could have certainly got us to our dream by 2020 or at least closer. Sri Lanka is a country that achieved high economic growth during certain periods during the last four decades. Therefore, it is not an impossible task to aim for very high economic growth over a long period of time. 

However, inconsistent policies, regular changes to plans and priorities, lack of focus, and bad governance over projects have been highlighted as impediments to our growth not only by public, but also each Government that took over from the other. 

 

Good governance outcomes depend on people managing the processes

All processes depend on people who are managing them. They ensure efficiency and effectiveness of the process outcomes. Therefore, people managing the governance processes (be it Central Government, Provincial Councils or Local Governments) are key in ensuring the effectiveness of it. Sri Lanka has intelligent and capable people with high potential in almost all areas of our workforce including the public officials. Despite the common argument about brain drain, my view is that the country is not short of talent. 

However, these talented resources can have the wrong attitudes. When it is the case, it’s a recipe for disaster. If people managing the country’s recurrent requirements and development initiatives do not follow good governance processes and they also don’t have a mind-set to ensure it, even the best plans will not deliver the expected outcomes. Therefore, people with the right attitudes are key in ensuring the effectiveness of good governance processes. 

 

Success of (good) governance is driven by the attitude of people including the leaders 

Good governance objectives should be embedded in the minds of people. Leaders should walk the talk, set the tone and ensure everyone complies with governance processes. Good governance should be part of a culture. If leadership does not have the right attitude, and they neither encourage good governance processes nor follow them, people working with the leaders will also follow them and not comply. Such organisations and processes are generally destined for failure. Therefore, successful governance depends on leadership and the culture, the tone from the top, leadership walking the talk, and also the appropriate mind-set of the people managing the governance processes. 

 

Greed and selfish behaviours inhibit good governance 

Almost all issues we encounter are driven by people behaviour. Selfish attitudes and greed are among the key motives that drive irresponsible behaviours. This is the reason for the introduction of checks and balances that prevent human beings circumventing the processes to suit their selfish needs and improperly benefit from them. Checks and balances include many activities that review compliance with (good) governance requirements. If the checks and balances are also not effective, governance will be a failure. Effective checks and balances processes highlight noncompliance even if other key controls fail. 

 

Success of corporate sector organisations in ensuring good governance

Generally, most of corporate sector organisations have good governance processes although they also encounter challenges due to greed and selfish behaviours. The latest example of such a challenge being the German company ‘Wirecard’. However, there are lessons that can be learnt from the corporate sector on good governance. Most good governance practices have common elements or themes. Some examples although not a comprehensive list are: 

 

  • having clear policies, procedures and organisation structures
  • having clear accountability and responsibility to implement the policies, procedures and plans 
  • having effective checks and balances in place to ensure compliance (these include various activities, established functions and forums) 
  • taking action (including disciplinary action) when noncompliance is identified 
  • leadership walking the talk and developing a culture that supports right practices and values

 

The key benefit of effective good governance frameworks in corporate sector has been delivery of organisational strategy and business growth. Beneficiaries of such outcomes are not only the shareholders but all stakeholders connected to that organisation including employees, business partners (suppliers, distributors, retailers), environment and even society at large. 

Governments can learn good governance best practice from the corporate sector and adopt them to ensure that their goals are also achieved effectively and efficiently. I am not suggesting that Sri Lanka cut and paste processes from the world or the corporate sector and follow them blindly, but more importantly we need to accept and believe that good governance will play a key role in our future development and success. We need to have the correct attitude and approach to governance and a culture ‘to do the right things the right way’. I am confident that it will enable more effective and rapid economic development of our nation and improve the wellbeing of our people. 

 

Looking forward – expectations during the next decade

We now have a new Government led by President Gotabaya Rajapaksa. There is expectation among citizens that their economic dreams will be delivered by the new Government. Although this Government has been elected for only five years, we should have a vision for the next 10 years and a road map with key milestones to achieve it. Delivering that vision is in the hands of the President and his Government, and the bureaucrats. 

There are many countries that have demonstrated that good governance supports and enables rapid economic development. Therefore, the Government should have the right attitude towards good governance processes and ensure that the oversight forums that support the right checks and balances are also reviewed, strengthened, protected and given the freedom to act independently. Whilst it’s the responsibility of the Government to ensure good governance, citizens should also have a role to play by speaking out especially when the good governance processes are challenged. 

We cannot afford to lose another decade with little or some development, we need accelerated development and good governance processes that will help in realising the economic dream of all Sri Lankans. 

Let’s not make the next 10 years another ‘lost decade’.


(The writer is an Independent Director and has held senior finance roles in many countries for British American Tobacco.)

 

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