Sri Lanka needs to ‘reinvent’ its governance model, improve execution capabilities: MTI

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Since independence Sri Lankans have frequently and hopefully changed political parties, from blue to green, from green to blue, occasionally a blurred purple, while the reds have continued to threaten on and off the field!

After almost 70 years of having control of its own economic destiny, the economic results of the nation have progressively and comparatively deteriorated. Opposing political parties have and continue to spend most of their energies on blaming their opponents, while the voters, after every ‘honeymoon’ with a newly elected party, blame the politicians. The blame game goes while, the economy suffers.

There is ample empirical evidence from diverse regions and countries that prove that the performance of a country’s economy is strongly and positively co-related to its economic management capabilities. Even countries that have benefitted from the bounties of nature like Nigeria, Venezuela (to name a few), have suffered due to poor economic management. Hence, the argument that what Sri Lanka needs is a change of systems and improving our economic management and execution capabilities.

In this feature, we highlight a few concepts that MTI Consulting, via its Thought Leadership initiatives, have highlighted in the past.

The 4-point test to any government in power

  • ‘Walk the talk’: Focus on delivering what you promised
  • ‘Cut to the chase’: Start the value-delivery process now! Celebrations can come after you have delivered!
  • ‘Show me the money’: This is a paid job (with public money) to deliver effective and honest governance. Bashing opponents and taking revenge does not ‘feed’ the nation.
  • ‘Co-opposition’: Cooperate with and encourage a healthy opposition, while objectively competing

How do your measure economic progress?

Countries like Singapore, Hong Kong and Dubai are often used as examples of countries that Sri Lanka should emulate. For sure, there are great learnings we can take from these countries. But should we not set our own balanced socio-economic goals – that will ultimately make the wider population happy?

Should we not take learnings from a wider range of countries, e.g. ‘Gross National Happiness’ from Bhutan? Will skyscrapers and hubs translate to wider happiness? The Arab Spring, Brexit and Trump are all stark reminder that Politicians have lost sight of why they exist? Will they ever learn?!

What can we learn from Brexit?

Consequent to Brexit, $ 2 trillion was wiped off stock markets. Where did it ‘evaporate’ to? Did this money ever exist in the first place? Human greed to make quick big money (with a simple click transaction) has driven us to place insane valuations of capital markets. Emerging markets trying to blindly ape the so-called developed capital markets should take a lesson.

Ultimately, the only way humans can add value to each other (remember Adam Smith) is by producing and consuming goods and services of value to each other. This is a rude awakening to emerging markets to focus on basic human needs, SMEs and grassroots job creation and not be overly seduced by capital markets!

What can we learn from the Greeks?

An economy, much like a household, must learn to live within their means. If what they ‘consume’ far exceeds what they produce (domestically) and what they earn (via exports), then bankruptcy is a matter of time.

Printing money and creating imaginary wealth (via risky investment tools) is only a temporary ‘pain killer’. Perpetually borrowing from your neighbours has its limits. Politicians and Regulators can ‘talk’ their way through economic performance, but you cannot ‘fake’ real economic value-addition. Don’t have grand parties (like the Olympics) if you cannot afford it and if there is no ROI!

The job of a minister

When a country is at economic crossroads, the policy makers should be deeply engaged in strategising, which in turn has to be based on strong rational analysis. For this to happen, the Minsters must develop their strategising competencies and dedicate quality time. However, if more of their time is spent on ceremonial and administrative aspects (which should be the job of the country’s civil service), then strategic decision making may be compromised.

At the end of each day, ministers should ask the question: “What has been my strategic contribution today – that will eventually contribute to the socio-economic prosperity of the country?”

How do we recruit talent to govern and manage State institutions?

To achieve significant socio-economic progress, Sri Lanka needs independent, professional and empowered management of its State institutions, which has been progressively weakened and the vacuum filled by ‘politicians’. Capacity building is a must, but is a long-term process.

Selecting the head of an institution is a highly scientific HRM process – have ministers developed this competency? Is there a documented job description and person specification for the heads of state institutions? Is that the basis of selection? What assessment methodologies are used to ensure job-fit and organisational-fit? What kind of orientation and job briefing is done when assuming duties? What KPIs are set, who and how are they measured and communicated to the public?

With every regime change, the entire board of most major State-Owned Enterprises (SOEs) are ‘sacked’ and replaced with an entirely new board, often with no formal transition or ‘knowledge transfer’ process. This can be detrimental to the business. However two effective practices that can be considered are:

  • Under the auspices of the Auditor General, the Government should recruit a pool of professional non-executive directors, who can be rotated among the SOEs. They should be truly independent and cannot be politically dislodged. This can be in addition to the political appointees (if they must really resort to that!).
  •  Make it a compulsory legal requirement for any outgoing SOE board to formally hand over a report and conduct a closing presentation for the incoming board – in the presence of an independent auditor.

Here is an idea to consider: To bridge the talent gap we have in the civil and foreign service, invite retired SLAS professionals for a structured mentoring program and encourage private sectors professionals to apply via a mid-career entry route.

Basic electoral reforms – as a layman sees it

If I vote for a candidate from Party A, if he/she decides to switch to Party B after winning – is that not a fundamental violation of my choice? Sri Lankans working abroad are, by far, the country’s highest export earner – why are they deprived of voting? Most candidates are in high spending mode for their campaigns. Can they all ‘afford’ this? Or are there ‘investors’ enabling them? For ROI or CSR? How does such high spending translate to voter benefit?

Wars over water and waste

If we continue to ‘consume’ the way we do, we will soon run out of space to dump our garbage. Colombo is looking to transport its garbage to Puttalam, but that is only a temporary ‘cure’ to an escalating global challenge.

A few radical thoughts to consider. What if we are charged for the garbage we dispose by the weight? Or asked to pay for the storage space based on the degree of bio-degradability? What if we are paid for the segregated garbage that can be re-used or recycled? What if businesses are heavily taxed for the quantum of packaging in their product and then given an attractive rebate if they re-use and /or recycle same?

Garbage is a function of consumption and consumption is a function of affordability. Therefore, it is ironic that the garbage we generate in the richer parts of a city is dumped where the poor live. Successive governments are primarily responsible for not having stricter laws (and enforcement) on production, consumption, disposal, re-cycling and re-energising. But, businesses and consumers also have a role to play. Do businesses really think beyond getting the product to the consumer?

Do we as consumers really think beyond consumption and the trail we leave behind? Should businesses and consumers should be ‘taxed’ for the garbage they generate – thus driving more responsible actions? Then, use this tax revenue as incentives to start-up ‘Waste-2-Energy’ventures.

How about a luxury water tax? Why? Product usage (and wastage) is significantly influenced by the price charged – as % of the consumer’s ‘wallet’. If we continue to use (and waste) water the way we do now, catastrophic consequences seem imminent, possibly ‘water wars’. Less wastage and more equitable distribution of water can certainly help, but the biggest ‘squanderers’ are the ‘top-end’ users.

A steep tax on high usage of water may help the environment and the Government’s income. Of course this must be supported by a multitude of other incentives and deterrents. For instance Los Angeles has a ‘Water Police’ and Rajasthan has ‘Water ATMs’. Like for solar energy, consider preferential funding on water conserving devices.

The real cost of traffic – is more roads and buildings the only answer?

Except for a ‘joy ride’, traffic on the road is a derived demand. Therefore we should we first challenge ‘why are people on the road?’ before we decide to build more roads. With the advancements in affordable technology and connectivity, why physically visit your office on every working day? Why physically build big towns and big offices (and the traffic it generates) when it is possible to be small, yet be part of a bigger ‘connected’ world?

Future competiveness, be it an economy, enterprise or employee, will depend on smart application of ICT. So why ‘ape’ mega cities that were built in a ‘physical’ era? Why not build our own ‘Futurepolis’?

Who is responsible for preventive justice?

Every time we hear of a gruesome crime, we seem to believe that a death penalty will be the deterrent.

Human behaviour is driven by one’s self-justified perception. These perceptions in turn are strongly influenced by society, one’s own socio-economic circumstances and one›s state of mental health. Therefore, every time such crime is committed, there should be a deep study of what drove such behaviours, so that the underlying causes are addressed. We owe this to humanity.

The burden of a loss-making national airline

Given below are five possible reasons as to why any nation needs a national airline, in particular given the crossroads that Srilankan Airlines is currently at:

  • If it is a profitable business
  • As a ‘loss leader’ to the national tourism industry – provided the tourism industry’s profits ‘compensates’ for the national airline’s losses!
  • If international airlines are not willing to service the demand for aviation in and out of country
  • If the economic and social cost of closing it down is much higher than the cost of continuing with a loss making state enterprise
  • For national pride – provided the country can ‘afford’ it!

Why should the Government be in business – let’s take the grocery trade as a case in point?

Is there a shortage of retail grocery outlets in the country? Do the Government Groceries (GGs) offer preferential pricing for the underprivileged? Do the GGs stock products which are not available elsewhere and at similar prices? Do the GGs act as a preferential channel for local producers who cannot access the private supermarket chains? Do the GGs make super profits that can be ‘ploughed back’ to improve society?

If the answers to the above are ‘no’ – why be in business? Shouldn’t the government invest its limited ‘energies’ on the fundamentals, such as agriculture, education, health, public transportation and employment generating industries?

Bribery and corruption – it takes two to tango!

The current regime has begun tackling bribery and corruption, let’s hope it will be impartial, sustainable and acts as a deterrent. However the focus seems to be government institutions and politicians, who are always at the ‘receiving end’! World over, it is the private sector that has been the instigator of white collar crimes – think of big names/cases in banking, oil and gas and pharma.

Closer home, how many of our top business groups can attribute their success to their business capabilities – in a level playing field? How many can honestly claim they have not violated the law/got political preferences – in terms of procurement tenders, land allocations, licenses, board appointments, share transactions and price control? Let their conscience speak.

Thinking outside box – a governance model disruption?

Why do we need MPs to represent us in parliament? Can’t we all directly/digitally express our choices on issues of national importance and a well-managed civil service to effectively execute such decisions? What if we do away with party politics and replace it with issue-based politics? Which means no permanent parties, only temporary issue based groupings. It’s time for ‘Governance Model Disruption’.

MTI Consulting is an internationally-networked, boutique management consultancy enabling clients to ‘Analyze > Strategize > Realize’ profitable business opportunities. MTI’s practices include Strategy, Business Operations, Corporate Finance, Talent & Resourcing, Go-to-Market and Tech-Advisory. Since 1997, MTI has worked on over 690 assignments in over 43 countries, covering a diverse range of industries, clients and business challenges. The MTI team comprises of a multi-national pool of Strategists, Analysts, Researchers, Industry Specialists and Functional Specialists.

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