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Feb 2017 Economy and Policy

Published on: 2017-02-19 12:17:40     644 times read    0  Comments
<p>Foreign Aid Dynamics<br /> Humanitarian or Development ?</p>

“They were born on different planets, Humanitarian aid [whose modern roots can be traced back to the 19th century] was born largely out of emergency situations – natural and human-based. A lot of the work then was on symptoms or keeping people alive. The development world was born out of colonialism, beginning pre-World War II, and morphed into modern development assistance after [the war]. These monies tended to go for technical assistance, education, health, job training, agriculture ... the focus was livelihoods, growth and getting people out of poverty.” 
- Michael Barnett, in Empire of Humanity, A History of Humanitarianism 

--BY VAIJAYANTI KHARE

The two streams were conceived to address different problems, and so traditionally, they draw resources from different funding pools, are coordinated separately and have had vastly different implementation timeframes. Development work is funded in three-to-five-year cycles, and Humanitarian aid comes with conditions that require money to be spent in six-to-eighteen months.

One of the important questions is where does humanitarian end and development begin, and the other is the cost of the organisations providing either of these, and of course, whither goes all this.  In the context of Nepal, which is the focus of this article, the line dividing the humanitarian from the development is so blurred that one does not ask many questions about the foreign aid coming in today. The life of the people in such organisations, the aura this sector has as opposed to any other sector and the minimal checks on (or glamorised) outcomes of aid and operations across the board has, in fact, made it an integral part of the economic model of this place. In addition, I think that we are trying to use the wrong tools for the job and place too much emphasis on humanitarian actors [who are] trying to address chronic, complex problems that lie in this ever-spreading blur. The other significant questions are whether such easily gotten foreign aid develops or cripples the government’s capacity and intent as well as the private sector’s responsibility towards a healthy economic and citizen growth. 

There are reasons why the two streams are separate although many an expert has voiced that there is no real divide. Humanitarian assistance which is provided on an impartial basis requires actors to be able to operate independently, which means that they do not work with governments in most cases because governments are often party to conflict; the primary partners of development work and actors tend to be governments. Humanitarian assistance is provided on the basis of assessed needs, development takes its steer from recipient government priorities. Humanitarian objectives are much more straightforward (saving lives, alleviating suffering), while development focuses on state building– and both can be equally hazy. Then, there is the culture of heroism in relief work. Development workers, for the most part, are technocrats, working within multi-stakeholder teams to solve problems. In Nepal, especially, the glitz and glamour of holding positions in such organisations is blinding, heroism and competency are far from any motivator or outcome.  

The need for radical change is clear, as this sector is leaking from everywhere.  A combination of incremental improvements, new tools and most importantly, assessment of direct outcomes and a change in mind-set of actors would be the key to change.  

The origin of such foreign aid could be multilateral, bilateral or the INGOs. The modality of such assistance could be as program support, project support, a SWAP, humanitarian assistance or budget support. The type of funding could be as a grant, a loan or technical assistance.  The resulting permutation-combination of all this is a labyrinth of funds, organisations, sector focus and workforce. This abundance is not just difficult to navigate but also difficult to measure and assess. Many an actor of this foreign aid stage thrives on this spaghetti effect. 

According to the Development Co-operation Report of the Ministry of Finance, the volume of aid disbursement in FY 2014-15 reached a total of USD 1.13 billion of which ODA contribution was USD 1020.75 million (90%) and INGO contribution was USD 116.89 million (10%) in this period. Despite the devastating earthquake in April 2015, the level of ODA disbursement stands at almost the similar level as compared to the previous fiscal year (USD 1.03 billion in FY 2013-14). Of the total disbursement of ODA, about 45 percent was provided by multilateral donors, while approximately 55 percent came from bilateral donors. The overall trend of ODA flows with regard to disbursement remained constant (around one billion dollars annually) over the period of five years. The projects are scattered across the country consisting of 234 grant projects, 165 TA projects and 43 loan projects. (A project may constitute both, the grant and loan). Although there is no major shift in the total number of projects, the shift is in sector preference, thus making the health sector the largest sector to receive ODA, followed by local development, education, road transportation and energy. 

Comparing donor wise disbursement through on-budget modality, it is found that the World Bank Group, Asian Development Bank, India, China, Denmark, Finland, SAARC Development Fund, GAVI, OFID, IFAD, Saudi Fund, and Nordic Development Fund have delivered above 90 percent of their disbursement through the government budget whereas the EU, Korea, Netherlands, USAID and KFAED provided about 90 percent or above of their disbursement through off-budget mechanisms. Aid portfolios in Nepal continue to remain fragmented. It is found that donors are engaged in many sectors with scattered funds resulting in the fragmentation of donor portfolios. 

Donor engagement in various sectors in the context of commitments indicates that the World Bank Group is the lead donor in education, economic reform and agriculture, the Asian Development Bank has been the largest donor for road, energy, urban development and drinking water, the United Nations Country Team has been the lead partner for other social sector areas, USAID is the lead in health, EU in local development and UK in home affairs. From the donor reports and data, it appears that this was the trend even during 2016. 

The year 2017 brings in apprehension regarding the trend and direction foreign aid will take across the board– donors, sectors, actors and funds. In addition to the US President’s change of heart, the rest of the donor body is rethinking Nepal on their agenda and may well take the cue from the White House. 

It is a diplomatic and geopolitic necessity that the foreign aid dynamics are redefined.  It is evident that tonnes of literature and debate about the non-efficacy and ‘undesirable’ results of aid on one hand and more tonnes of data and reports about the ‘progress’ the donors have made on the other hand, just strain to outsmart each other. One cannot emphasise enough the reality brought to light by Dr Damisa Moyo in the book Dead Aid: Billions of dollars going to Africa every year has made Africa worse. Over the past 60 years, at least, USD one trillion of development-related aid has been transferred from rich countries to Africa, and yet, real per-capita income today is lower than it was in the 1970s, more than 50 percent of the population is still on a dollar a day, a figure that has nearly doubled in two decades. 

Closer to our focus, we need to redefine foreign aid, the objectives and direction, the dependency and the relevance. The private sector, the government, and the individual citizens need to wake up to these questions and begin to shape the future of foreign aid.

Vaijayanti Khare is known for her dynamic engagements in the corporate, academic, social and development fields in Kathmandu over the past decade. Her writings are a reflection of her hands-on work, insights, studies, success and challenges.


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