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The road to plan implementation: Planning is not an end in itself. A look at the stage beyond

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
December 1975
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C. P. Cacho

In the past three decades, most developing countries have established central planning organs and produced multiyear development plans. They have thereby been considered to be engaged in planning. Ostensibly the two instruments were intended to be prime movers of economic and social development. However, the record of development in these countries has, in general, been disappointing. This is evidenced, for example, by the outcome of the UN First Development Decade. To a significant extent, the outcome is attributable to inadequate plan implementation. It may, therefore, be worthwhile to review some of the principal lessons of experience in plan implementation for the particular attention of practitioners of development planning.

The main causes of inadequate plan implementation may be divided into two categories. The first comprises factors such as inadequate political commitment to planning, frequent changes of governments, natural disasters, and severe adverse movements in the commodity terms of trade. These are normally beyond the control of most practitioners of planning and therefore fall outside the scope of this review. Nevertheless, they are worth mentioning in order to complete the picture and to put the ensuing discussion in proper perspective. The principal components of the second category are too restricted a concept of planning, inadequate involvement of implementers in plan preparation, imprecise definition of targets, inadequate attention to policy and project components, inadequate institutions, and shortage of skilled manpower. These are more amenable to improvement by planning practitioners and are therefore the focus of our discussion.

Concept of planning

Planning is too often regarded, even today, as little more than the act of preparing a multi-year document called a plan. When this approach is adopted, the plan becomes an end in itself rather than a means to achieving development; it is usually not operationally oriented, and little effort is made to implement it. If planning is to become an effective tool of development, this narrow concept will have to give way to the acceptance of planning for what it truly is—a continuous process in which government plays a management role in mobilizing the society and collaborating with it in a complex assortment of activities based on the plan and geared to attaining its objectives.

A plan should be regarded as a living instrument, flexible and evolving in response to changes in the numerous assumptions on which its direction, policies, and programs are based. It should not be a once-and-for-all purely reference document of fixed prescriptions for the period to be covered.

A budget is not a plan

The process of keeping the plan up to date while implementing it shows how indistinguishable plan preparation is from plan implementation and therefore how unrewarding it is to keep them in separate compartments. The process may be unified through either the annual plan or the rolling plan. Yet very few of the less developed countries (LDCs) practice either type of planning or any other appropriate systematic mechanism. The nearest most countries get to any form of annual planning is the narrowly conceived, conventional budget which primarily seeks to ensure that recurrent revenues are adequate to cover recurrent expenditures and applies any current surplus toward capital expenditures in the hope that the surplus will be supplemented by domestic or foreign borrowing and grants. While the fashion of presenting annual budgets under the umbrella of statements purporting to survey both the local and world economic scenes has become widespread, in many cases the statements are unrelated to the budget in any meaningful way and are therefore largely superficial. Usually they are prepared after the main elements of the budget have been fixed, and in many instances after the budget is completed. They do not influence the budget.

By contrast, annual planning involves reviews of the recent past and the present and surveys of prospects for at least a year to eighteen months ahead, over a broad spectrum. In this way the progress of plan implementation is monitored, the plan is kept up to date, and the budget graduates from being a passive device for bringing together central government revenues and expenditures to being an effective instrument of development. Both conceptually and in practice there is little difference between annual planning and rolling planning. The notable difference between the two is that annual planning (for a fixed, long-term period) takes a pause every five years or so for a thorough review and the preparation of another multi-year plan, while rolling planning (also for a long-term period) involves review on an annual basis.

Where planning is practiced as an operational process, the potential benefits from discarding the traditional approach, as far as practicable, in favor of the program approach to budgeting soon becomes obvious. Here the emphasis is on the program—on what it is intended to achieve and how efficiently this is done. The program approach is oriented to objectives, is amenable to review and assessment, encourages comparison of performance and achievement with targets, focuses on real rather than on purely monetary measurements, and is conducive to the practice of management to improve efficiency.

The concept of planning as a continuing process signifies a fundamental change in the approach to development management, and it deserves the serious consideration of practitioners of planning in LDCs.

Inadequate involvement

The concept of planning tends to influence who does it and how it is done. Even today, many plans are the outcome of an average of two years of effort by itinerant teams of foreign advisors, sometimes with local collaboration, or of small teams of local technocrats with occasional help from abroad. Whatever their origins or composition, these teams tend to work in isolation from those who will normally be involved in plan implementation or in carrying on the planning process. Inordinate amounts of time and effort tend to be devoted to sophisticated theoretical and editorial elegance and to achieving ex ante consistencies to the neglect of, for example, project preparation. Planning becomes a mere exercise in rational economic calculation and loses sight of the inextricable bonds of economic and political processes and of the human element, which is so crucial.

“close and continuous collaboration between the finance ministry, the monetary authority, and the CPO, is indispensable”

The kind of universal commitment to development activities which should radiate from a plan calls for involving all sections of the society, most importantly the political leaders, from the very inception of plan preparation. It is the function of this governing group, be they civilian or military, to provide the leadership, adopt policies, enact legislation, and institute measures to carry out policies. Also, it is they who provide and allocate resources for investment. All this is unlikely to happen if political leaders are only peripherally involved in plan preparation. Likewise, the ideas of public servants in sectoral organs and of the various parts of the private sector must be sought. Development activities have been known to fail because public servants with responsibility for implementation were not consulted at the planning stage. They thought the activities to be ill-conceived, and therefore they lacked the motivation and enthusiasm for implementation.

In other cases failure to consult the private sector has resulted in inadequate response to incentives for undertaking development planned for that sector. Finally, what the “educated” planners at the center tend to dismiss as the “ignorant peasants’ resistance to change” is not so much resistance to change per se but rather to giving up the tried and proven for the unproven and to what they regard as being incompatible with their environment.

Intragovernmental differences

In many countries, the central planning organ (CPO) is either not or is only peripherally involved in the annual government budget exercise, and is therefore denied a voice in the important activity of helping to determine the mobilization and allocation of public resources. The situation is an outcome of inadequate consultation with the finance ministry during the plan preparation, which is rooted in the well-known antipathy between the two bodies. The CPO tends to regard the ministry as too short-term and conservative in its thinking and too mechanical in its approach to budgeting. The ministry retaliates by accusing the CPO of being too theoretical, too idealistic, and not sufficiently realistic, and by denying the CPO meaningful participation in the annual budget exercise. The traditional ascendance of the finance ministry among government organs and the preoccupation with short-term considerations in situations of resource shortage, as is the case in most LDCs, combine to make that ministry more influential on decision makers than is the planning organ. It appears that this factor will have to be appreciated by the CPO if the finance ministry is to become a willing collaborator in the implementation of the development plan. More importantly, close and continuous collaboration between the finance ministry, the monetary authority, and the CPO, is indispensable to effective national economic management.

The demonstrated lack of, and sometimes downright resistance to, cooperation seems to call for greater consultation starting at an early stage of plan preparation and continuing throughout the process. The task of consultation is less forbidding than may appear at first glance. Organizations like chambers of commerce, manufacturers’ associations, farmers’ groups, and regional, district, and village councils, and such instruments as sector planning committees, are usually willing agents.

No longer should planning be regarded as the sole preserve of a few technocrats whose main concern is with prescribing what they regard as economically rational in situations where political, social, and motivational concerns are equally important.

Definition of objectives

A weakness of many plans is the imprecise definition of objectives. This may have been appropriate when data were scarcer and the statement of a few broad objectives such as “improving the standard of living” or “increasing GDP by x per cent a year,” had to suffice. Although the full range of data required is still not available, there is enough information in most LDCs to sharpen the definition of objectives.

A cross section of examples of targets would include: raising productivity for each crop from a given total quantity to a given quantity per acre or worker; raising total production of each crop to a specified figure area by area; training given numbers of persons in identified skills, reducing the incidence of malnutrition or enteric diseases by certain percentages annually, increasing the number of viable production cooperatives by so many each year, changing the structure of the economy so that, for example, an industry that tends to be labor-intensive and more nationally desirable raises its contribution to GDP from, say, 15 per cent to 25 per cent. The broad spectrum from which the examples are drawn shows that most targets are amenable to being quantified.

Inadequate preparation

Despite the substantial amount of time—up to two or more years—devoted to preparing plans in many LDCs, most plans are inadequate in two essentials—policies and projects. Since a plan’s main components are overall strategy analysis, policies, projects and other investment proposals, and financing, these two inadequacies are significant and therefore call for special attention.

Most of the background work in support of policy proposals should be done, and the policy proposals should be in advanced stages of readiness for implementation, by the time the plan is launched. Also, there should be a fair number of prepared projects, preferably ranked in order of priority on the basis of agreed criteria. The experience of many LDCs falls far short of these standards. Few policy proposals are usually ready to be translated into laws, regulations, or other devices that serve as instruments for achieving policy objectives. Many projects included in the plan and the investment program are hardly identified, or are only partly prepared, or are fully prepared but not appraised, and therefore priority ranking of projects is not practicable. This hampers efficient resource allocation. Further, the lead time required by external financial agencies is invariably not reflected in the proposed timing of projects.

Inadequate preparedeness is only partly the result of shortages of trained manpower. It arises mainly from a misplaced emphasis in plan preparation on the macro and other broad elements of the plan in preference to the narrower, more specific operationally oriented activities. To some extent this reflects the training and background of many preparers of plans. It suggests also that better use may be made of available skilled manpower if some of the time spent on macro-type work is diverted to making in-depth studies of key policy proposals and to preparing some of the clearly more important projects. At a minimum, rough cost-benefit analyses should be made for as many identified projects as possible and at an early date, as a means of improving the basis for allocating resources.

Emphasis on policies and projects

Policies have tended to be denied the importance they deserve as instruments of development. The neglect is probably attributable to the savings-investment-income model which still dominates the thinking of development economists, and to the natural inclination of many external agencies which provide resources to developing countries to make investment the focus of attention. Finally, in many cases it is politically easier to spend than to grapple with the implications of policies which, although they may have substantial long-term net social benefits, may be against the interests of some sections of the society in the short run.

The neglect of the policy area has been costly to many LDCs. The production of food crops has declined or has not kept pace with demand because of pricing policies which turn the terms of trade against the farmer. Highly protected inefficient industries with negligible value added continue to be established partly because of insufficient attention to policies for industrial development. The price of capital in many countries continues to favor capital-intensive operations even when surplus labor is a severe social problem. These are only three of a host of policy questions that need to be tackled urgently in many developing countries. Policies and investments are complementary. Indeed, there are many occasions on which the implementation of appropriate policies would enhance the output of certain investments, or even help to achieve given objectives and targets with the investment of lesser resources than otherwise.

Lack of prepared projects is a notable cause of lower investment than could be undertaken and therefore a lower rate of development. When there are either no or only a few prepared projects, it is easier to misdirect resources. By sheer default, resources are allocated to the first project to be prepared rather than to the project that yields the highest social return per unit of investment.

Some institutional inadequacies

The main thrust of the planning process is the actual implementation of policies and the execution of projects up to the efficient and timely attainment of the objectives of the plan. The contributory activities are diverse, complex, and wide ranging. Their efficient management depends in part on appropriate machinery to facilitate coordination and guidance, motivation, actual execution capability, reporting and follow-up, evaluation and overall review, in a continuous and systematic manner.

Experience suggests that such machinery should have certain basic organs, management and communications systems, and, of course, manpower. The basic set of organs should comprise a high-level political body or supreme national planning authority (SNPA), a central planning organization (CPO) to serve that body, and planning and coordinating units (PCU) for sectors and major regions. The SNPA, which is the key planning body, should be a strong and powerful committee of the cabinet actively involved in the direction, coordination, monitoring, and review of activity and progress toward achieving a country’s development objectives. The normal division of functions requires that such an authority shall have a technically competent secretariat or central planning and management organ which must be seen to have, as well as to exercise, the authority of the SNPA if it is to function as an effective executive arm. At the level of the sector and region, experience indicates the need for organs to coordinate sector and regional activities, undertake studies, identify and prepare projects, and in general do at those levels what the CPO does nationally.

“the follow-up-evaluation-reporting processes are either not done or are only done sporadically and inadequately”

Central planning organs

Many CPOs tend to be isolated. Their other main weaknesses are inadequate status and authority resulting from an inactive SNPA and the absence of widespread acceptance by other national organs. The ideal organization of the CPO and its location both physically and in the structure of the overall government machinery continue to be seriously debated. Experience shows that what matters is not whether a CPO is a ministry, an independent commission, a part of the president’s or prime minister’s office, or a department of the ministry of finance; but whether it is invested with, is seen to be invested with, and is capable of exercising enough of, the authority of the SNPA to enable it to function effectively.

The officials of many CPOs still regard themselves as a staff group concerned with economic intelligence and plan writing rather than as the hub of an array of diverse operations. The realities of the environment in which they operate, require that full consideration be given to social and political factors, to compromises between interest groups, and to the time preference of the political leadership.

Planning and coordinating units

Despite the intentions expressed in many plan documents, PCUs are as yet scarce in the planning machinery of many LDCs. Even when they are established there is a tendency to use them for purposes other than planning and coordination. Hence the dearth of sector work and prepared projects, and the tendency of management systems and other efficiency devices to be weak. The deficiencies stem partly from a shortage of skilled manpower but mainly from indifference. The introduction of annual planning, program budgeting, and management by objectives, should help to emphasize the need for an effective organ at the sector level with functions similar to those of the CPO at the center.

Management systems

Regular reporting on the progress of at least the more important development activities, such as policy implementation, project execution, and the behavior of such indices as wage rates, prices, money supply, and external reserves, is a requirement of effective management. In order to serve useful management purposes, these periodic reports should be coordinated at the sector or regional level by the particular PCU and analyzed for the responsible minister to enable him to better manage and account for the development activities for which he is responsible. In this way, lags in implementation and other problems can be dealt with more expeditiously. Copies of the analyzed sector reports should also be sent to the CPO for further analysis in preparation for review by the SNPA within the context of the overall review of development performance. Following these reviews, the SNPA can take policy decisions within its competence and recommend others to the cabinet.

Follow-up necessary

Reporting is only one side of the monitoring process. There are numerous examples of the inadequacy of merely receiving and analyzing reports and of the need for supplementary visits to project sites on a systematic basis to verify reports and obtain a better appreciation of possible problems. Visits from ministers and senior officials help to maintain alertness and boost morale. They also enable urgent decisions to be taken on the spot and are therefore a desirable feature of the follow-up and reporting system.

In many developing countries the follow-up-evaluation-reporting processes are either not done or are only done sporadically and inadequately. Even the periodic reporting of spending is often too late to be of use to decision makers, and decisions have to be made in an information vacuum. This is not conducive to effective public management.

Skilled manpower shortages

The dearth of skilled manpower is a well-known impediment to the operation of the planning process. Many of the inadequacies already discussed are at least partly rooted in the shortage of skills. Education and training are long gestating and costly activities and it may be many years before the supply of skills matches the demand. However, observation suggests a few measures that may help to alleviate the situation in the short run. There is a sizable pool of skilled manpower from developing countries residing in developed countries. Yet, there is no known systematic census by any LDC, of numbers by skills, and no studies to determine precisely what the “push” factors are and whether it is feasible to provide appropriate motivation for these skilled LDC nationals to return home. Conjectures abound as to why large numbers prefer to remain abroad. But the premium on scarce skills is so high that inaction based on conjectures may well cost more socially than action based on censuses and in depth studies of skilled LDC nationals abroad. Much of the training given to nationals of LDCs even at the post-graduate level has no particular job orientation. Therefore, a situation of persistent shortages of skills frequently exists side by side with underutilized manpower capability. The neglect of manpower planning is the primary cause. Efforts to establish or to improve that activity would help to maximize the benefits from the resources put into training.

Some proposals for appropriate conceptual changes and institutional development, based on the lessons of experience, have been offered. They are not, nor are they intended to be, an overall framework or model, although links are observable between some of the proposals. They are merely some of the obviously more fundamental yet less demanding changes that emerge from a review of the situation. Basic to all this is the concept of planning as a process and therefore the imperative to keep the process moving smoothly, efficiently, and effectively in the achievement of national development ends.

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