Good policies are essential to development in various spheres of activity, such as the economic, social and environmental spheres. Indeed, the policy framework is critical to determine the actions and performance of firms, households, public sector bodies, and other economic units in accordance with the aggregation levels taken at the macroeconomic level. Policy formulation is thus a crucial function of government and the quality of such policy consequently depends on the capability of government to manage the policy-making process.
National sectoral policies outline a government’s organisational goals, objectives and vision with respect to a particular socio-economic sector. They often include plans and strategic actions meant to clarify complex management objectives by regulating government and private activities. They also set out both optional and required behaviours to achieve such government goals and objectives. Among others, national sectoral policies aim to:
- assist coordinated and planned actions and reforms;
- facilitate policy coordination and coherence;
- clarify institutional arrangements;
- anchor existing good practice(s); and
- pledge political and collective will and commitment, necessary for effective policy formulation and implementation.
National sectoral policies generally develop with reasonable order and predictability, even though they develop in spurts. Usually, the process commences when an issue is placed on the Government’s agenda, either as a reaction to a sectoral issue of public interest or merely out of contention. It is ideal for the starting point for policy development to be grounded in the specific conditions, existing institutional settings and challenges of the country. These are necessarily influenced by social, economic and political factors. In addition, policy-makers should be well-informed about international good practice and, should such data exist, policy should be based on sound evidence regarding the challenges to be addressed. Moreover, policy design should be founded on a realistic feasibility assessment, including the level of commitment of the key stakeholders.
In putting together a national sectoral policy, the input of key stakeholders is critical. Transparent and fair consultation with stakeholders raises awareness of the challenges faced that might not be evident from the policy maker’s point of view, helps in the development of possible solutions, and facilitates the achievement of consensus on action thereby minimising friction. However, it also raises the possibility that certain existing stakeholders with an interest in the policy being enacted or other potential stakeholders who have not yet come into being are prejudiced through the consultation process due to asymmetries of power that might exist in societal and market settings at the time of the enactment of the policy. This means that in order for policy to be non-discriminatory and non-exclusive, policy makers also have to ascertain that they take into account the interests of those groups that are not as well-organised as those that will participate in the consultation process and also of those interests that have not yet come into existence with a view to allow for new markets, new industries and enlargements thereof to take place.
Having identified the main issues (i.e. problems and situations with a potential to be improved), the subsequent step would usually entail the development of possible options for addressing them. Common methods of addressing challenges include:
- carrying out legal and institutional reforms, such as creating new authorities or coordination systems and setting up regulatory frameworks;
- Assessing the type of market(s), if any, would need to be developed and what such markets require in order to be able to develop. Usually we distinguish between 3 broad categories of markets for sectoral policy purposes, these being irrepressible markets, spontaneous markets and socially-contrived markets. Each market requires different levels of infrastructure sophistication to be able to develop;
- identifying and creating specific economic incentives to achieve a policy’s objective, for instance through tax incentives, introducing pricing and charging mechanisms, and creating market and trading opportunities; and
- conducting education campaigns and government programmes.
The choice from the potential actions identified in the above exercise should be evaluated against a set of criteria in order to arrive at a policy decision. These may include:
- Happiness criterion;
- Fairness (social justice) criterion;
- cost-effectiveness and fiscal effects;
- technical efficiency;
- allocative efficiency;
- environmental effects;
- policy acceptability;
- sustainability; and
- feasibility in the broad sense of the word.
It is also worth noting that, as comprehensive and good as it may be, a policy is merely as good as its implementation. The following elements are essential to effective policy in practice:
- setting achievement targets and clear milestones within a fixed timeframe;
- identification of a single lead agency, department or ministry, for implementation;
- identification of other policy areas that may be affected in an unintended way in the policy implementation process;
- avoidance of piecemeal approaches to policy-making;
- horizontalisation of policies, objectives, and actions;
- clear implementation plans at multiple levels;
- assessment and, if necessary, improvement of the fit between existing institutions, mandates and the policy, and, if applicable, their capacity-building in implementing the policy;
- identification of a key institution for monitoring progress;
- allocation of adequate budgetary and other resources, and a plan for resource mobilisation;
- institutionalisation of monitoring and evaluation mechanisms; and
- sustained political commitment and leadership.
Subsequent to policy implementation, continuous monitoring and evaluation of the policy’s impact will provide key inputs for policy review and increase the knowledge required to design better plans and programmes in the future. Indeed, monitoring and evaluation enables policy implementation and the impact of the policy to be objectively assessed. To this end, the policy should include provision for mid-term review, final review, and an impact assessment to capture long-term effects.
The Equinox Advisory team specialises in several policy sectors, such as the environment, energy, technology, education, water, health, transport, communications, banking, the European Union and industry. Our team provides research and analytical services in the following areas:
- Conducting background research, needs analysis and identification of stakeholders;
- Establishing guidelines, frameworks and methodologies for formulating policies and drafting sector wide policy themes;
- Identifying policy options and criteria for their analysis;
- Design of policy implementation strategies and actions; and
- Monitoring and evaluation activities.