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| Sunday, 29 August 2004 |
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| News Business Features Editorial
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Regional Development - an ideal starting point for an economic take-off by Lloyd F Yapa The policy statements of the government have indicated, that regional development will be given priority mainly to improve the distribution of income, as it is skewed in favour of the Western Province (WP), which alone generates around 50% of the money value of the total final goods and services produced in the country per year or its Gross Domestic Product. Rationale Many people in the rest of the country eke out an existence without the bare necessities of life mainly due to their inability to earn an adequate income. This situation cannot be justified on moral grounds. Nor can it be justified on social and economic grounds, even when examined from the purely selfish standpoint of the better off in the WP ; these people could boost their own incomes further and enjoy a life devoid of violent crime as well as socio political upheavals, if the incomes of the poor in the rest of the country, especially of those in the Northern, Eastern and Southern provinces can be raised steadily, as a larger amount of the goods and services generated by the WP could find a ready market. This is not all - the rest of the country also could provide a greater quantum of inputs for a larger number of enterprises in the W P to expand and flourish. Regional development thus could be the starting point for a growth spiral for the entire economy. The government therefore has to be congratulated for starting off this excellent strategy of socio economic development with the 10,000 small tank rehabilitation program mainly in the fertile dry zone, where water for irrigation and drinking purposes are no doubt the key to the enhancement of incomes of the large farming population. Questions But should we rush into it, when even the massive Mahaweli scheme did not exactly deliver the land 'flowing with milk and honey' promised by the politicians, who launched it? Did it fail to do so only because it emphasized on large reservoirs/structures? Aren't there other questions to be answered like, whether the types of crops grown at present will have a ready market, generate an adequate return to cover costs, besides ensuring the realization of the desired levels of incomes, where will the capital required for production and processing of the crops come from, will there be sufficient non farming jobs for those who are invariably displaced, when the productivity of agriculture is raised, is the existing infrastructure adequate to transport the inputs and outputs , above all will the rehabilitated tanks dry up as usual during the 6-9 rainless months in the face of the relentless deforestation, taking place in the country and last not the least, are the existing farmer organizations and public institutions strong enough cope with such problems? An appropriate planning process No doubt seeking answers to such questions take time. However, the adoption of a simple planning process (by a committed leadership), referred to as strategic management, described in these columns earlier by the writer could avoid many of these problems and ensure success faster than expected. It consists of a) setting quantifiable goals eg the desired levels of income for the number expected to populate the area, b) the formulation of strategies to overcome the identified impeding factors and building on the impelling factors along with the actions necessary to implement the strategies and lastly c) the monitoring of actual progress of implementation against planned targets. There are several other principles to be observed, when undertaking regional development, especially in this country : 1. Implementing such a program can be a nightmare in this country in view of the existence of a multiplicity of institutions with overlapping powers, responsibilities and contradictory agendas. Therefore, to obtain speedy results, the program has to be undertaken by a suitably empowered and funded inter ministerial/departmental body, with the necessary skills, preferably housed under one roof for ease of co-ordination. 2. The entire process has to be undertaken in consultation with the ultimate beneficiaries and others, who have some stake in the program, to deliver the results desired by the people. 3. The feasibility of the entire program has to be checked under various 'what if ' situations of risk to prevent project failure. 4. The rate of mortality of small and medium scale enterprises producing similar commodities is high, due to the severe competition, that will ensue amongst them, unless the products are unique or differentiated. These SMEs are also too small to be competitive ie unit fixed costs could be high unless they amalgamate and establish corporate bodies eg companies to be able to obtain the necessary funding, produce on a large scale and procure the necessary technologies for value addition and the required management expertise. 5. Mechanisms have to be created for a massive transfer of investment to such areas mainly by opening up of the land market, by grant of freehold possession of State land held by farmers on lease and infrastructure development, especially construction of urban centres for attracting supporting industries, services and also for heightening the generation of economies of scale and value addition. 6. The State can only be a catalyst in this process (due to lack of funds and the acute dearth of management skills) by undertaking the necessary planning, formulation of policies, offering incentives, assistance and management of the program on the basis of the principles described above.Also the primary motivation for the realization of the ultimate goals can come only from the areas and enterprises selected for development themselves. 7. The final requirement is a high level of political commitment. This, some of the leaders concerned do not seem to lack.In other words the regional development strategy undertaken by the government offers a great opportunity for a take off of the entire economy, if a carefully planned and implemented approach is adopted. Perhaps the authorities are already thinking along such lines. |
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